adminmillion, driven by an increase in volumes, the group said in a financial statement to February 29.
Operating costs rose 20 percent to about US$20,7 million, surpassing revenue growth by 4 percent. Earthmoving sales rose 140 percent at Barzem, 75 percent in motor vehicle sales at Puzey & Payne and a 17 increase in spare parts. Tractor units at Farmec and generator unit sales at Northmec declined by 27 percent and 2 percent respectively.
“The economic environment characterised by tight liquidity constraints, high interests rates and low disposable incomes adversely affected the group operations,” said Tractive Power, which foresees improved business in the second half to be spurred by mining expansions projects, road and dam construction and improved liquidity.
EBITDA margins declined to 6,3 percent from 9 percent the prior period.
Finance costs grew 4,3 times as the group accessed short-term borrowings to finance working capital requirements. Cash flows were strained due to high working capital requirements. Net gearing deteriorated to 19,2 percent from 14,1 percent, although it remains manageable.
Demerged from Astra group in 2001 when 33 percent of the group floated, Tractive is a good indicator of the economic activity.
Analysts expect increased capital expenditure in the mining and agricultural sectors will benefit Barzem, should the economic growth be sustained.
The economy is expected to grow by 9,4 percent this year driven by a continued recovery in mining and agriculture, according to official statistics. But independent economists and the International Monetary Fund have forecast lower GDP growth of between 5 and 6 percent.
Online Reporter