adminElectrical retail and engineering concern Powerspeed Electrical last week reported a drop in profitability for the half-year ended March 31,2016.
Profit after tax came down to $161 595 from $392 827 in the prior comparable period.
This was after operating profit went up to $5,6 million compared with $5,2 million while finance costs increased to $450 393 from $381 150.
Cost of sales also went up to $15 million up from $14 million.
Management said the erosion of the gross margin from 29,7 percent to 27,6 percent, was a result of the group “purchasing” market share.
Expenses also increased as a result of branch network enhancement.
In terms of the trading (retail) operation, management said the current economic challenges were having a significant negative impact on consumer spending and therefore on throughput in the group’s stores.
Management said the engineering division was affected by the continued general decline in agriculture, construction, manufacturing and mining.
It added that is considering to exit the engineering operation.
“Although there is demand for products and services, there is little funding available, and throughput was significantly down.
“As a result we have had no option but to further reduce the resources allocated to our engineering operations. This conforms to our long-standing strategy to exit Engineering in the most cost effective manner,” said the group in a statement accompanying the results.
Going forward, the group will focus on maintaining the Electrosales Hardware brand and also to reduce expenses throughout the organisation.
The board did not declare a
dividend for the “given the relatively high level of borrowings”. — BH24.
Online Reporter