British Leyland yesterday disclosed net losses of £42.9m for the first half of its financial year, against a loss of £12.7m for the same September/March period last year. The- loss includes a £29.3m provision after the closure of the Spanish subsidiary.
Lord Stokes, the chairman, said yesterday that the figure represented the maximum estimated costs of this withdrawal and could be lower if a buyer was found for the plant. This is British Leyland’s second big provision recently. Last year it provided £15.7m after withdrawal from Australian manufacturing.
The interim figures show a trading loss of £1.8m against a loss of £8.3m for the same period last year on a turnover up 13.8 per cent at £843m from £741m, despite a fall in the number of vehicles sold from 496,000 to 420,000; Net interest charges rocketed to £18m from £8.3m in the first half last year. The company paid more interest in the first half than it did for the whole of last year when interest charges Were £17.1m.
This reflects the big increase in the company’s borrowings, which stood at more than £327m at the end of the six-month period. Interest charges in the second half will certainly spiral even farther because Leyland has already started utilizing the first £50m guaranteed by the Government. Pre-tax losses were £19.8m against £16.6m for the first half last year. There is no dividend, against gross interim dividend last year of 0.746p. Sales reflect the worldwide fall in demand.
“Competitive prices both in the United Kingdom and in export markets have prevented us from fully recovering the cost increases incurred”, the directors say. The company is worried about its ability to make further price increases since, it is acknowledged, “consumer resistance” will inevitably set in. Mr Alex Park, acting managing director, said trading losses had been reduced by achieving higher margins with a better “model mix” and by cutbacks. The workforce has been cut by 6,000 since the end of September and by 17,000 since the beginning of the year.
Participation urged: Demands for effective worker participation and consultation as the price, of the workers’ full cooperation in the Government’s plans for Leyland were again pressed strongly yesterday at a meeting between national trade union officials and company shop stewards with Mr Wedgwood Benn, the Secretary of State for Industry, and Sir Don Ryder, the Governments industrial adviser.