Astra revenue up

put on hold until after elections, the company said in a statement accompanying its financial results yesterday.

Underlining the rise in operating expenses, intensive competition and a stagnating revenue base, operating margins declined from 35 percent to 33 percent.

Profit before tax was 43 percent lower than the prior period at US$600 000. Astra Paints was mainly affected by slow down in business activities as projects were shelved while other customers were deliberately weaned off after failing to adequately service their accounts. Gross margins were flat but operating expenses grew by 16 percent mainly due to employment costs. Sales volume for the chemical division increased by 5 percent but gross margins declined from 26 percent to 23 percent.

The balance sheet shows a slight decline in total assets due to the depletion of stock levels.
Current liabilities declined by 14 percent and current assets declined by 6 percent. Short-term liabilities were reduced by US$500 000 to close the period at US$600 000. Analysts say the liquidity position of the company is very encouraging given the tight operating environment. Cash flow from operation declined by 27 percent to US$600 000 mainly due to the liquidation of old inventory and a deliberate strategy to reduced credit sales.

“The strategy by management to deliberately curtail credit on non-performing clients is very plausible given the tight liquidity situation. However, accounts receivables hardly declined on the balance sheet indicating that the company already has problem debtors on its books,” said a Harare-based financial analyst.