Burns, Philp & Co.

Review of Year's Operations

SALES of merchandise by Bums, Philp and Company Limited, during the year ended March 31 increased by £596,447 to £5.189.863, a record. Expenses also increased, the percentage of “obliga tory expenditure” to gross profit rising from 52.90 for 1936-37 to 55.247.

At the annual meeting on May 18 the chairman, Mr. James Burns, said the in crease in working expenses, salaries, and wages, costs of general management, in spection and taxation, was £107,495. Pro vision for depreciation, bad debts and losses rose by £23,969, although bad and doubtful debts written off represented only 0.447 per cent, of aggregate sales. Gross profit rose by £145,973. An increase in

insurance values and rates would cost the Company about £ll,OOO a year more on the present fleet.

Mr. Burns said that every year the Pacific was becoming more important, not only to Australia, but to the outside world. In his opinion the Company’s work in the Islands over the past fifty years had been of great benefit to the Commonwealth. He hoped that the Commonwealth Government would never try to enforce an undistributed profits tax. It was necessary to put more money into the South Sea trade each year to keep pace with foreign competition, and to enable a fair profit ratio on the orig inal capital to be maintained.

“This undistributed profit tax plan was tried in America”, said the chairman, “and when passing through there last year I heard more adverse criticism of this than of any other move of President Roosevelt. The United States Congress has lately repealed this measure, the reason given being that it retarded eco nomic recovery”.

Mr. Burns said taxation loomed larger every year, and became more intricate, so a staff of experts had t 6 be kept to deal with. it. If the National Health In surance Bill became law, all this work would become materially increased.

The Company and Burns Philp (South Sea) Ltd. had had a crop of misfortunes during the year. There was the fire on the “Macdhui”, the fires in the Rabaul store, Penney’s store in Brisbane, and the copra store in Apia. There was also the loss of the “Makoa” and the stranding of the “Neptuna”. Some of the losses had been covered by insurance, but they all tended to dislocate trade.

Two small motor vessels for the Islands trade, ordered last financial year, had been completed and delivered. The fleet had been written down substantia 11 v while profits would permit, and especially in view of the big addition to the shipping property figures which would take place when the new motor vessel “Bulolo” was delivered in a few months. It cost more to make a profit these days than it did a few years ago The contract price for the “Montoro”. built in 1911, was £A.73,880. The “Bulolo”. although a lit tle larger, would cost well over £A.500.00n Overtime rates instituted were a heavy burden in running Australian ships against outsiders, and if it were not for the subsidy granted by the Federal Gov ernment the Company could not exist in competition with foreign vessels.

The chairman said that trade during 1937-38 had been particularly good, but the outlook at present, owing to the low prices of most primary products, was un certain. The Company’s shipping trade was likelv to suffer as wool and wheat in Australia would probably bring much less than last year, and all Islands pro duce, such as copra, pearl shell, cocoa, ivory nuts and rubber was depressed.

The situation in Europe and elsewhere was the cause of a lot of trouble.

The balance sheet showed that profits had been made as follows:

The Bay Loo Co. Ltd., of Rabaul, was recently awarded two constructional con tracts by the New Guinea. Administra tion —namely, the erection of native la bour quarters at Wewak for £995, and the erection of native labour quarters at An goram for £690.

Gross Net earnings. profits. £ £ 1935 .. . . .. 792,841 211,006 1936 . . .. . .. 860,119 216.980 1937 . . 965,978 226.065 1938 .. .. . . 1.111.950 272,710