HomeBusiness DigestPelhams volumes 50% up despite slack in demand

Pelhams volumes 50% up despite slack in demand

Independent Property

Conrad Dube

PELHAMS Ltd’s chief finance officer Phineas Whata says volumes in 2002’s fourth quarter dropped by 15% on slackened demand but could not dilute a 50%

increase recorded in the third quarter.


Pelhams sells furniture to a wide consumer market. Furnishing properties has however become difficult due to soaring prices.


At an analysts’ briefing on final results to March 31 2003 Whata said: “The first quarter of the year under review was good but was diluted to an extent by a not so good second quarter but volumes increased by 50% in the third quarter to help catch up on volumes although demand slackened in the last quarter.”


He said inventories were at $2,7 billion up from $950 million and were expected to last at least three months reflecting the group’s stock piling strategy as management continued to acquire sufficient stocks of critical lines.


The gross margin of 53% compared to last year’s 44% and was achieved on the back of exclusivity on important lines and availability on the more competitive electrical goods.


These sustained and grew margins.


Whata said Pelhams’ gross debt book was at $5,2 billion but averaged $2,2 billion during the year and arrears at less than 1% of the book reflected good credit control procedures within the group.


“Bad debts written off, less recoveries, amounted to only $10 million or 0,36% of a gross book that averaged $2,8 billion for the year. Arrears on that proportion of the book not handed over at year end were again less than 1% of the book,” he said. The company said although provisions continued to be made at levels that reflect the general macro-economic decline, the integrity of the book was “beyond reproach and must rank among the best”.


Pelhams is expected to soon conclude a scheme in which a portion of the debt applicable to a portion claimed for tax will be received on every credit sale.


Finance charges income dropped to 42% of operating income from 65% in 2002 after growing by 104%. This was due to depressed interest rates and a lower proportion of credit sales most, of which occurred in the latter half of the year.


To that effect the company pushed more cash sales, which increased to 35% from 20% in 2002.


Attributable profit increased to $2,3 billion up from $810 million on revenue that rose 165% to $6,2 billion compared to $2,3 billion during the comparative period in 2002.


Basic earnings per share rose to 527 cents per share from 188 cents per share.


“The cash equivalent earnings per share of 515 cents matched the headline earnings per share also of 515 cents, showing the company’s ability to convert book profits into cash profits. As such the reported earnings are of a high quality as they are all bankable,” said Whata.


The company declared a dividend of 150 cents per share.


Pelhams shares traded at $34 on Wednesday this week.

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