British Motor Corporation’s interim statement, released well after market hours yesterday, is not likely to cheer the motor sector of the stock markets today. The interim is held at 7.5 per cent, but earnings for the first 32 weeks of the current period-it ends on July 31-suffered a severe setback compared with the same period last year: this in spite of a rise in output to 385,720 vehicles, against 352,135 in the corresponding period last time. This is again a story of lower profit margins.
A higher proportion of output was of the lower priced type and this together with increased sales in highly competitive markets and a number of strikes are to blame for the setback. As trading profits for the year ended July 1961, were nearly halved at £16,600,000, the prospects for this year are bleak. Indeed, the qualifying statement with the interim payment points to that.
” The directors consider that the general outlook coupled with purchase tax reduction and the availability of the dividend equalization reserve justifies the declaration of a maintained interim.”
Reference to the dividend reserve suggests that the payment has not been earned. Last year’s total of 20 per cent was, in fact, barely covered.