Financial results create more activity

activity on the market.
Last week, Astra Industries Limited said the liquidity crunch in the country, although it is improving will continue to exert pressure on the operations of the company.
In the group’s financial performance for the six months ended February 2011, management said they would spend more energy on managing working capital cycle, marketing and cost control.
The biggest challenge facing the group’s steel business in the first six months of the year was lack of construction and trading competition, which has traditionally been strong on big projects.
Despite an improvement in sales volumes during the first half of 2010, the revenue generated is still below the levels required by the group to break even. As a result, Astra Steel has been mothballed due to low business activity in the country’s construction industry.
During the period under review the group generated US$12 million in revenues and profit for the period ended at US$282 000. About 54 percent of the revenue was generated in the first three months of the year while the second quarter contributed 46 percent.
Astra’s earnings per share for the period was US0,19c with weighted average number of shares finishing the period at 139 415 803.
Aggregate sales for the group increased by 28 percent compared to the same period last year.
However, gross margins took a knock, declining 6 percentage points resulting in a negative impact on the group’s profitability. Sales volumes for the paint division also grew by a significant 28 percent compared to the same half of 2010.
Capacity utilisation for the group stands at 43 percent peaking up from about 33 percent achieved in the corresponding period.
Chemicals sales also registered growth with Astra Chemicals Limited registering a comparative volume growth of 28 percent as a result of competitive pricing and introduction of new products.
Chemical Enterprises, one of its subsidiaries, achieved sales volume growth of 97 percent, largely driven by building products.
However, the chemicals division posted losses mainly as a result of declining margin, high provisions for doubtful debts and poor performance of alcohol-based products, adversely affected by an unfavourable excise duty regime.
Meanwhile, Tractive Power Holdings turnover for the financial period ended February 2011 was 65 percent up to US$18,9 million with operating profits rising 319 percent to US$1,5 million.
Attributable profits were 1 879 percent at US1, 4 million. The group’s balance sheet stood at US$28,8 million with US$17,7 million being attributed to the equity holders. The group closed with cash and cash equivalent valued at US$600 921.
Underlining the impressive performance was a 57 percent growth in tractor sales and a 3,9 times increase in generator sales at Farmec. Barzem recorded a 17 times growth in material handling unit sales. However, earthmoving machines sales remained static compared to the same period last year
Puzey & Payne vehicle unit sales were down 41 percent on comparative prior year performance. However, parts and servicing recorded volumes growth of 23 percent and 40 percent respectively.
The group also secured franchise representation for Toyota, trading as Toyota Mutare.
Banking on a reasonable order book for earthmoving machinery and tractors the group forecasts an improvement in trading volumes in the second half of the year.
They took to consolidate their strategic thrust on supply of machinery to agricultural and mining companies.
Analysts say based on the group’s expectation of improvements in sales volumes in the second half they expect a 10 percent improvement, which they believe should translate into full year revenues and profit after tax of US$39,8 million and US$2, 8 million.
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