FINANCE AND INVESTMEN T (Continued from page 327) L.N.E.R. RESULTS
With the announcement of the London and North- Eastern results the home railway story for 1938 is complete. I did not expect the L.N.E.R. to spring a surprise on the market, and the figures are just a little below the revised estimates based on the remarkably good showing of the L.M.S. Net revenue has fallen sharply from L10,107,442 to £6,653,167, so that the full payments on the guaranteed stocks have been earned only with a small margin, leaving £196,000,000 of preference and ordinary capital to go with- out a dividend. Like the other main line systems, the L.N.E.R. succeeded in achieving substantial economies during the second half of last year. Other things being equal, higher rates of wages, increased costs of materials and a heavier charge for maintenance of way and works would have involved the company in a total rise in expenditure of £1,766,000. It is now shown, however, that this was offset to the extent of £1,035,000 by economies from improved working and from savings arising from the smaller volume of traffic handled. Thus the net rise in expenditure was reduced to £731,000.
Although this achievement falls short of that of the L.M.S., it is evidence of a stern fight against an increasingly unsatisfactory revenue position. Indeed, the L.N.E.R. is now facing a much more serious threat to its financial status than any of the other lines since, if the present decline hi gross receipts continues, net revenue must soon reach a level at which debenture interest is not fully earned. Fortunately for the company and for the railways as a whole the recent trend of traffics has shown a marked improvement, although the weekly figures are still running substantially below those of a year ago. My own guess is that this year's figures will cut last year's declining curve in the late spring, an estimate which I base on the assumption that activity in the heavy industries will enjoy a modest recovery. If and when we begin to see " plusses " in the weekly comparisons we should also see an improvement in the marginal stocks on the Stock Exchange. I still like Southern Preferred and L.M.S. 4 per cent. First Preference as lock-up speculative investments.
* * * *
Previous page
