The Gazette from Montreal, Quebec, Canada • 25

i m'f "0 ci'i'T if 25 Thi GAZE1TE, Munheol, April 3, 1973 Lamontagne, Gillespie differ on trade Koffler favored on quality direction coherent science policy for Canada and an industrial strategy for Canada. You put everything in place and they're beautiful. But the real world 't work that way." 'INTERESTING' James Grandy, deputy industry minister said the Lamontagne statement was "interesting and worth thinking about." He and Gillespie admitted Canada had been more inclined to a package approach following the restrictive economic and trade measures imposed by Nixon In Aug. 1971. That program was managed by John Connally, then U.S.

treasury secretary. Grandy noted that the package approach did not satisfy Connally in early 1972. And trade relationships were cool for the rest of the year. INVESTMENTS by Denis Giroux of The Goxctto basis as specific problems arise. It would be tragic for Canada to accept such a piecemeal approach." EACH PROBLEM Gillespie had stated, just as clearly on Friday "solutions should be sought to each problem on its individual merits rather than trying to lump them all together into some sort of packaged settlement." Interviewed yesterday, Gillespie said "initially there was a flirtation with a package deal.

I certainly hadn't any great support for it. "It suggests all one's problems, current and future, can be settled in one negotiation. It's completely unrealistic." Repeating a point he has made in recent speeches, including his Johns Hopkins address, he said irritations and distortions are inevitable in a trade volume of $27 billion a year, or about $40 billion if the so-called invisible or financial transactions are added. "It's far better in terms of a maturing relationship that both partners recognize this." U.S. President Nixon and an increasing number of his senior officials are taking this view, Gillespie said.

He characterized the package deal as expressed by Lamontagne as "an immature response. "It doesn't really recognize a full understanding of the kind of on-going response we have with the United States. It doesn't really reflect a full understanding of the political process. "To think you can put together some nice big blue print that will hang on the wall for all time is totally unrealistic." He said Lamontagne is fond of global solutions "a By CLAIR BALFOUR Financial Times OTTAWA Sen. Maurice Lamontagne, chairman of the Senate's special committee on science policy, was stating an out-dated concept of dealing with trade relations when he spoke at a conference in Washington, D.C.

last Saturday. Lamontagne said "only a package deal can make sense from a Canadian point of view," when he discussed methods of negotiating with the United States at Johns Hopkins University. Such a position is exactly opposite to the approach advocated at the same the day before, by Alastair Gillespie, minister of industry, trade and commerce. Lamontagne said "Americans seem to prefer to engage discussions on a piecemeal Dollar strengthens, gold down American currency reached its highest level since the float began. It closed at 2.8525 against Friday's 2.836.

Dealers in Frankfurt and London could not explain the strength of the dollar. In Tokyo, the dollar closed higher at 265.9 yen, up 0.1 yen from Friday. against most European currencies. The dollar closed stronger in Paris, too. For the commercial rate it sold at 4.563 francs against Friday's 4.454, and for the financial rate 4.555 against 4.535 on Friday.

In West Germany, the LONDON (UPI) The dollar continued to strenghten on European money markets yesterday and the price of gold dipped below Friday's $90 an ounce. The pound sold at $2.4757 just before the official bell, a net loss of 18 points on the day. But the pound did well The exceptional quality of Koffler Stores management leads .4. E. Ame3 Toronto, to recommend the purchase of the company's stock for capital appreciation.

Koffler, based in Willowdale operates through subsidiaries, and franchises a chain of retail drug outlets and dry cleaning stores. Total retail sales made through the 180 drugstores and 58 dry cleaning stores are estimated by Ames at $135 million for 1972. The broker estimates they should jump to $158 million in 1973. In fiscal 1971, Koffler had net earnings per share of $0.54. For last year, the Toronto broker estimates them at $0.68.

But more important, it foresees a figure of $0.94 for fiscal 1973. "We expect earnings this year to increase over 35 per cent to approximately per share from for the year just ended (Jan. 31). A further 40 per cent increase to a level of $1.30 to $1.40 per share should occur in 1974," Ames says. The broker attributes Koffler's superior growth to the management's ability to understand and apply franchising and merchandising concepts.

"We also expect Koffler Stores to outpace growth of the retail drug industry (approximately 7.5 per cent per year) by a wide margin. "Sales gains of approximately 20 per cent per year should continue over at least the next two years through new stores openings and internal growth in Eastern Canada and increasing maturity of the converted Cunningham operation in the West which has been purchased In Feb. 1971," Ames says. Koffler's shares currently sell at $19. In the last two years, the price range for the stock has been $15 to $20.

The price earnings multiple range has varied between 16 in the 1970 bear market to 30 last year. Koffler pays a 14 cents dividend per share annually. New costs hurt Asbestos Corporation Existing facilities operating below capacity, start-up costs at new ones and higher costs for both labor and materials tarnish the 'image of Asbestos Corporation as a good investment. Canadian Business Service (CBS) and Babson's both of Toronto do not recommend the stock, CBS even insists the stock should be sold. At the time of both studies, Asbestos Corporation's shares were selling around $18.50.

They currently sell at $17.25. Asbestos as its name indicates, Is engaged in the mining and milling of asbestos fibre which is distributed internationally. The company is 54.6 per cent owned by Canadair the Montreal Aircraft firm which is in turn a subsidiary of General Dynamics of New York. Over the past three years, Asbestos Corp. has had major problems with its profitability.

Earnings per share fluctuated between $2.16 in 1969 to $2.19 in 1971 after reaching a peak of $2.26 in 1970. In 1972 however, they fell abruptly to $0.48. Sales also dropped last year to a four year low of $49.5 million. They were over $50 million the three previous years. Babson's and CBS are not of the opinion that a drastic recovery will occur in 1973.

"Profitability was undermined by the combined effect of several factors, including higher cost of labor and materials, start-up costs at the Asbestos Hill Mines and higher interest expense," CBS says. It now appears that many of the problems being experienced by Asbestos Corp. are not likely to be resolved in 1973. Looking beyond 1973, though, we can anticipate the operating problems at Asbestos Hill being overcome and some recovery in asbestos prices taking place." Babson's adds: "As full production has not yet been reached at the Asbestos Hill Mine, the company's refining plant in West Germany will also be operating below capacity in 1973 and affect earnings." The investment firm says 1973 should not deteriorate from 1972 levels. In the past years, the price range for Asbestos' stock has been $15 to $37.

The company has recently stopped payment of its 20 cents quarterly dividend per share. Earnings growth seen for Nu-West Nu-West Development Corporation a major Western residential house builder and land developer, mainly active in the Western Provinces, gets a favorable recommendation from DuPont Glore Forgan Canada Ltd. "We believe that at its current price of $11, approximately nine times 1972 earnings of $1.21 per share and less than 7.5 times our 1973 estimate of per share, Nu-West stock is attractive for capital appreciation over the next 12 months," DuPont says. Nu-West's shares currently sell at $10.75. Their 1972-73 price range has been The company has just begun paying a 10 cents per share per annum dividend.

In 1972, Nu-West had sales of $57.3 million, up from $36.3 million in 1971 and $38.1 million the year before. DuPont does not forecast a large increase in sales for 1973 just about 5 per cent to million. But the broker feels that "greater emphasis on improving profitability and the absence of problems which had' reduced profit margins early in 1972 could lead to earnings growth to the Tele-Capitale seen undervalued In recent market studies, the shares of companies in the communications industry are getting priceearnings multiple of at least 20 by investors. A recent study by Bankers Securities even made the point that most stocks were cheap at this level in view of their potential. Maison Placements Canada, Montreal, points out that the stock of Tele-Capitale Ltd.

of Quebec City is greatly undervalued at its current price of $11, or 15.7 times 1973 projected earnings. Tele-Capitale owns and operates two TV stations in the Quebec City area and three radio stations located in Montreal (1) and Quebec City (2). This includes the most profitable TV station in Canada, CFCM-TV, which earned a 19.2 per cent net profit margin last year by comparison with a 12 or 13 per cent average margin for other stations. Tele-Capitale's stock has just been listed on the Montreal and Toronto stock exchanges. It pays a 24 cents dividend per share per year.

For 1972, earnings per share were $0.46 cents. They are estimated at 70 cents for 1973 and $1.00 for 1974. Maisons Placements Canada says the stock "represents one of the most intriguing and attractive investment vehicles in the communication field in Canada." Jump in orders, inventory indicate good first quarter example were doing a roaring trade in January. Their sales of automatic washing machines were up by 34 per cent from the year before and inventories jumped 62 per cent. Holiday Inn introduces: London, England.

Economists who have been waiting for some sign of inventory build-up as an indication of business confidence in the economic outlook should also be cheered by the latest numbers. Manufacturers' inventories in January were up 1.4 per cent from the month before again using seasonally-adjusted figures. The rise followed increases of 0.7 per cent in each of the two previous months. But the 1.77 ratio of inventories to shipments was at its lowest level for some time. Over the long run, most managers are anxious to reduce this ratio in the interest of cost control.

They have been helped in post-war years by such things as improved transportation and increasing use of computers. Inventory-sales ratios tend to fall as sales rise, but if they fall too far, it may mean that markets are growing faster than production capacity and shortages may soon occur. The inventory-sales ratio in the U.S. for total manufacturing and trade is now at L42 which some economists are saying is too low. As business attempts to bring inventories into line with booming sales and new orders, it should provide considerable stimulus to the economy.

The January numbers seem to be the first sign that this is starting to happen in Canada. Appliance manufacturers, for By MONICA TOWNSON Financial Times It looks as if manufacturers have just completed a good first quarter, if the January figures just released are any indication. Although shipments during the month did not show such a steep rate of increase as they did in December, manufacturers' new orders jumped by 5 percent in January compared with increases of Jess than two per cent iri each of the two previous months. The increase is based on seasonally-adjusted figures. Quebec increases U.S.

issue NEW YORK (DJ) -Quebec has increased its pending U.S. public sale of 30-year debentures to $125 million from an original $100 million due to heavy investment demand, a spokesman said. The province expects to begin the offering on Thursday through underwriters led by First Boston Salomon Brothers, A. E. Ames Halsey Stuart and Merrill Lynch Pierce Fencer Smitn Inc.

lis debentures are rated single-A by Moody's and double-A by Standard Poor's. London style and our contemporary Holiday Inn comfort. For information, contact our sales office in Winnipeg, Ottawa, Montreal or Toronto; or talk to your travel agent. You can make reservations by utilizing reo Holidex'system. Simply call any Holiday Inn.

LMJ Swiss Cottage. Marble Arch. Holiday Inn has just created these two new luxury hotels in London, England. And when you put a Holiday Inn in London, something fascinating happens. The aura, the atmosphere, the centuries-old tradition runs throughout both these Holiday Inns.

Yet you enjoy all the contemporary comfort and standards of service the Holiday Inn name stands for. Our London rooms, for example, are considerably larger than typical London hotel rooms. Both Inns are carefully located to provide you with convenient access to both business and shopping areas. So if you're travelling to London, consider us. We're convinced you'll appreciate our luxury Holiday InriSwiss Cottage Holiday Inn, Marble Arch COMMONWEALTH OF CANADA LIMITED WILLIAM D.

MELVIN Fuller Brush Company appointment Thomas C. Grant, president and chief executive officer of the Fuller Brush Company, announces the appointment of William D. Mdvin as vice-president, household sales for the United States and Canada. "Mr. Melvia is a native of Glasgow, Scotland, and has spent most of his business career in sales and marketing management positions.

mil Hoiiday Inn Plymouth, now open-Holiday lr.ns in Bristol and SloughWindsor opening soon..