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McDOUGALLS TRUST YIELD
Fluctuating wheat prices create a difficult trading environ- ment for flour millers but many of these undertakings manage to achieve a remarkable stability of earnings. McDougalls Trust, which derives practically the whole of its revenue from McDougalls, Ltd., the operating company, is a case in point. Over the past five years net profits have fluctuated within a range of less than i per cent., and the board has shown its increasing confidence in the company's stability by raising the ordinary dividend, a step at a time, from 5 per cent. to to per cent. The strength of the financial position may be gauged from the fact that at March 31st, 1939, the consolidated balance-sheet showed a general reserve of £190,000, apart from tax and advertis- ing reserves amounting to £66,000, against the issued capital of £66o,000. Free reserves and carry forward of the operating company amount to over £28o,000.
Discussing the latest financial results, covering the year ended March 31st, Mr. Kenneth A. E. Moore the chair- man, underlined at the annual meeting that profits had been maintained in face of difficult conditions. Political crises had been superimposed on a falling trend of wheat prices which had declined by 40 per cent. during the year, bring- ing a rise in the wheat quota payment from Is. 6d. to 6s. 6d. per sack. Both these factors had operated in reduction of the profit margin but the quantity of _flour sold rose to a new record figure. Mr. Moore disclosed the interesting fact that sales tended to rise in times of depression or crisis ; his theory was that in such times people go out less to places of entertainment and home cooking comes into its own. In addition, in recent days there had been a tendency for people to keep more food in the house. This year's prospects, it seems, are encouraging, sales of the operating company for the first quarter having been slightly in excess of those of the corresponding period of 1938. McDougalls Trust ,CI ordinaries, at 31s. 6d., yield over 61 per cent. on the to per cent. dividend. They should be worth holding.
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