BMC Results Not As Bad As Feared

B.M.C. Results Not As Bad As Feared
Finance, Industry and Commerce
By Our City Editor

The British Motor Corporation results, which are a lot better than most people had feared, can be expected to make a contribution to the recovery of badly needed confidence by the engineering industry.

As the Chancellor pointed out earlier this week the motor producers are a key factor in Britain's engineering industry complex. The fact that the biggest car maker of all has maintained its dividend, albeit with considerable help from reserves, and has suffered no worse than a 41 per cent setback in net profits when a loss would not have come as a surprise, will be added to the more direct purchase tax and investment stimuli administered through Parliament in conditioning industry's working morale.

In investment terms the B.M.C. 5s. shares should be the main beneficiaries today. They closed last night at 15s. 4 d. but are unlikely to be obtainable much below 16s. this morning. Even at 16s. the yield is a handsome 6.3 per cent, and with the dividend equalization reserve at £4,100,000 even after the board have dipped into it to the extent of £2,400,000 to meet the unchanged final of 12-25 per cent and a considerably improved outlook, there is something of a fixed interest element in this return. The debt owed by earnings of 12-25 per cent, against the 20 per cent dividend total, to a tax charge reduced from £4,322,315 to an " abnormal " £553,924, or 14 per cent of the gross is fortunately now a matter of past history. Although there is no comment by the board on the way the current year has begun, Board of Trade figures for August and September showed useful increases in both car production and exports over the corresponding period of the previous year.

With this auspicious start and following the cut in purchase tax, the ability to plan on the basis of a thriving home market that the manufacturers have been begging for from the Government for so long, they now have a chance to fulfill their promises both in terms of exports and profits. Last Year, which owing to a changed incidence of annual holidays contained only 48 working weeks against 51 weeks previously, B.M.C. produced 600,279 vehicles against 601,399 for the previous year. This could hardly have represented more than 80 Per cent of current capacity. Hence the set- back of 35 per cent in trading profits and 60 per cent at the pretax level. Next time it is to be hoped that the picture will be pleasantly different.