Cleaning company Taylors Group has reported a 35 per cent drop in profit, which it attributed to the impact of investment in new plant and equipment and higher labour costs.
The net profit after tax was $2.37 million in the year ended June 30, down from $3.64 millionin the prior year. Revenue rose $2.1 million to $68.8 million. Directors declared a final dividend of 6c a share, payable on October 3.
The company said the installation of new equipment at three of its six plants had increased depreciation expenses and interest costs. Changes to employment laws and labour shortages increased labour costs.
However, the company is predicting a "material" improvement in earnings in 2009.
"With significant advances made in laundry technology in recent years, new laundry equipment utilises significantly less labour, energy and water than older equipment," the company said.
Capital works were now largely complete at the main Pt Chevalier plant in Auckland and the Christchurch plant. This had imposed additional interest costs of $600,000 and depreciation costs of $400,000.
Less significant work is planned for the 2009 financial year at the Kelston plant and in Hamilton.
The Wellington plant in Newtown is under review and a new plant on a new site may be required in future.
The company has been affected by changes to employment laws under the Labour-led Government. An extra week of annual leave, higher minimum wage levels, mandatory penalty rates and changes to the calculation base for sick leave and alternative holidays had all affected the company, increasing labour costs by more than $500,000 a year.
"The full labour market and low levels of unemployment have also resulted in increased competition amongst employers for staff with a corresponding increase in the rates of pay for production staff."
