Sharp Fall In Profits Of New Leyland Group

The fall of £1,212,000, or 26 per cent, to £3,412,230 in Leyland Motors net profits for the year to last September is disappointing in spite of the fact that the decline is more than accounted for by the loss of £1,470,792 incurred by Standard-Triumph since it was acquired early in 1961.

The dividend rate is however-to be maintained at 20 per cent, as expected, and it is still covered just over twice by the latest earnings.

The past 12 months have seen buoyant sales of heavy commercial vehicles and the 6 per cent increase to £11,215,675 in Leylands profits, before depreciation and tax but excluding Standard, compares badly with the 22 per cent advance recorded by its nearest competitor A.C.V. In fact in view of Leyland's somewhat steadier past record it might have been expected to have fared at least as well as A.C.V. if not better. On the other hand an even greater loss by Standard-Triumph could have been envisaged.
The net result with earnings on the enlarged capital down from 75 per cent to 41 per:cent is just about as bad as the worst expectations. Depreciation at £2,918,555, against £1,410,418, was certainly heavy but the increase in this charge was largely offset by a reduction of about £1,100,000 in taxation.
Leylands £1 ordinary shares have been a falling market lately in advance of the results and eased 6d. more to 89s. yesterday. This announcement was made well after the official close. At this level dividend yield, is 4.5 per cent and earnings yield 9.3 per cent.

With A.C.V. at £0s. 9d.. down. 9d., yesterday, there is nothing to choose in dividend yield but the Leyland cover is a little thinner than A.C.V.'s 2.2 times on its preliminary figures. For the coming year, assuming that the Standard- Triumph loss is turned into a small profit, as forecast last March, there is a strong recovery element to attract investors in Leyland. But buyers had better wait to hear more up-to-date remarks on this point from the chairman, Sir Henry Spurrier, and also whether the group's order books are as good as A.C.V. have said theirs are.