HomeBusiness DigestAstra suffers knock as property sector slumps

Astra suffers knock as property sector slumps

Eric Chiriga

ASTRA Industries, one of the country’s biggest paint makers, says it has suffered a knock on its earnings because of the current downturn in the property sector.

ace=”Verdana, Arial, Helvetica, sans-serif”>The Zimbabwe Stock Exchange-listed company recorded a lukewarm set of results for the period ended August 31.

The property sector is in doldrums owing to the rise in interest rates and inflation which have a dampening effect on the construction industry.

For the first time since listing on the local bourse, the company made an operating loss of $4 billion because of the decline in demand as the economic crisis persists.

However the company made a profit after tax of $21,3 billion, 131% above last year’s $9,2 billion.

Nicholas Nyandoro, the Astra group chairman, said this was unprecedented.

“For the first time the company incurred an operating loss of $4 billion,” Nyandoro said. He blamed the loss on the economic downturn, which he said had impacted negatively on the demand for paints.

PG Industries, another company which heavily depends on the construction industry, has also been struggling due to low demand of its products.

Other companies have also experienced a decline in demand as high inflation continues to erode the disposable incomes of consumers.

However, Nyandoro said the past two months had witnessed an increase in the demand for Astra products.

“There was an upturn in demand in the past two months and as a result challenging budgets have been set,” he said.

But the company’s ability to meet these challenges would depend to a large extent on the availability of foreign exchange for the productive sector.

In their results for the half-year ended February 29, Astra made a turnover of $56 billion, an increase of 386% from the previous period.

Despite the significant decline in inflation rate from a peak of 623%, local business leaders and economists say inflationary pressures are still being felt and the root causes need to be addressed.

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