Last year's growth spurt is likely to be followed by a more sedate 2000-01 for Spotless Group, the services and plastics conglomerate's chairman told shareholders yesterday.
Speaking at the $1.2 billion company's annual meeting in Melbourne, chairman Brian Blythe said directors expected a satisfactory profit improvement in 2001, with `solid prospects' for the company's Australian businesses but strong profit growth expected for United States and New Zealand operations.
Trading for the year had begun satisfactorily but Mr Blythe said management was cautious about aspects of the company's near-term outlook, "with the broader Olympic effect on trading patterns not yet able to be assessed clearly, nor the flow-through effect of the goods and services tax impact on some parts of the business".
The chairman of the Melbourne-headquartered Spotless Group, perhaps best known for big catering contracts such as for the Melbourne Cricket Ground, said earnings from the company's US-focused plastics businesses would benefit from the fall of the Australian dollar against the US dollar. Mr Blythe said the plastics arm, which makes products such as coat hangers, would build a plant in Mexico to better service US clothing makers crossing the border, taking advantage of US-Mexico trade agreements.
The move was unlikely to significantly affect 2001 earnings but would provide better market access and lower production costs, he said. But despite the increasing importance of offshore operations, the company planned to continue to pay fully franked dividends in the foreseeable future. A dividend reinvestment plan was also approved at the meeting. Responding to questions from an audience generally supportive of the company's performance, Mr Blythe said Spotless had made a profit on its Olympics contracts, which had included catering at the athletes and media villages and other venues, but declined to say how much.
He also declined to specify the amount involved in severing Spotless's contracts with Docklands Stadium, although he said there was no loss of shareholder value in the deal's collapse.
Responding to a question from proxy-shareholder Stephen Mayne, the chairman defended the number of executive directors on the company's board, offering the view that management-heavy board teams could produce better performances.
All directors were re-elected, including Ian McMullin, 73, one of the business's founders. He had been with the company since pressing pants in a factory in Fitzroy as a teenager.
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