Net borrowing by Leyland up £80m

By John Armytage

British Leyland mobilized £80m. in short term resources in the last financial year. Cash and other quickly realizable resources were run down by £30m. to £66.4m. and the overdraft went up by £50m. to £145.7m., which was 31 per cent of capital employed compared with 22 per cent a year previously. The figures shown in the group's annual report published today, reveal another aspect of Leyland's difficulties during its year to the end of September, when the group made a profit of only £3,932,000.

Profits of £18,114,000 from the other vehicle operations and profits of £1,770,000 from other interests made up for a £15,952,000 loss by Austin/Morris. Leyland would have shown a net loss if the £1.6m. tax charge had not been reached after crediting £3.9m. relief for the losses and another £4.8m. which had been overprovided in previous years. While Leyland could have shown a small surplus after the year's difficult operations, it has made provisions of £3,350,000 against closure and redundancy costs and another £4,250,000 for rationalizing overseas distribution.

Thus, with no retentions, operations gave Leyland a cash flow of £42m. from depreciation and £10.2m. from investment grants. Meanwhile the group had decided not to slow down its investment programme, which cost £66.7m. during the year. The gap between spending and operational cash flow was £14.5m.. but there was also a jump of £45.8m. in the value of Year end stocks and a £17m, rise in the amount of money owed to Leyland. Thus the group had to turn to the banks. Lord Stokes, chairman of Leyland, writes in the report that the group believes the bankers' support "will continue to be sufficient until returns on our very large investment programme produce an adequate cash flow".

At the end of September Leyland's further spending plans totalled another £48m. on which £4.3m. investment grants should be receivable. The group is described by Lord Stokes, in a supplementary statement, as being "at the cross roads ". This spring the first British Leyland volume car will go on sale, after the normal three year development programme. But this will be only the first stage in rationalizing Leyland's volume car range.

Lord Stokes says Leyland cannot possibly finish revamping its volume car range until 1975 at the earliest. Similarly, he says, rationalizing production is unlikely to show its full benefits until 1975. The programme, however, is on schedule and the integrated plant at Cowley is producing the new volume car. Lord Stokes says the group should begin to return to better profits during the year, provided a satisfactory level of output can be maintained. Lord Stokes says the group needs a "stable and expanding home market so that we can plan ahead with confidence but above all we need control of the inflationary trends which are rapidly making us uncompetitive in world markets. We need urgently a period of industrial peace".

The report shows that the board has issued 4.5m. of the partly paid incentive shares, whose issue to directors and executives was approved by shareholders last August. The total available for distribution was 14m.; executives have taken up 3.5m. and board members a total of £1m. In an additional statement released today, Lord Stokes discloses that the group is anticipating world sales in all types of motor vehicle to risk by more than 40 per cent in the 1970s. Car sales alone, it is estimated, may rise by almost 50 per cent.

The company is expecting to be selling over 500,000 cars a year in Western Europe by 1975, and, assuming Britain joins the E.E.C., the end of the seventies could see Europe as almost as important a market for British Leyland as the U.K. In the home market itself B.L.M.C. expects car sales to grow substantially after the last seven years of stagnation, perhaps reaching 1-75 million by 1980. Lord Stokes does not envisage a further round of major automobile mergers, but he does believe there will be a growing tendency to closer cooperation between some of the bigger international manufacturers.

All main car plants shut for day
By Alan Hamilton Labour Staff

Engineering plants, car factories, docks and newspapers throughout the country were at a standstill yesterday as about 1,500,000 workers took part in the second of two one-day strikes against the Industrial Relations Bill. The Government estimate of the number taking part, at 1,259,000, was nearly 100.000 higher than for the stoppage on March 1. Union sources put the figure at nearer two million.

British Leyland closed 12 Austin-Morris factories in Birmingham, Coventry and Oxford. with 60,000 men idle. a further 5.000 stayed away from the Leyland truck factories in Lancashire.