HomeBusiness DigestPhoenix posts $59b profit

Phoenix posts $59b profit

Eric Chiriga

PHOENIX Consolidated Industries (Phoenix) posted a $59 billion pre-tax profit in the half-year ended April 2006 but analysts said high interest rates were i

mpeding the group’s potential to register stronger margins. They said Phoenix could record higher margins under a low interest rates regime.

Profit before tax increased by 567% to $58,9 billion during the year, while turnover rose 743% to $369 billion. After-tax profit increased by 581% to $41,17 billion in the period under review.

“Phoenix turnover was affected by high interest charges,” Kingdom Securities (Kingdom) said in a weekly commentary to investors.

Kingdom said the brushware manufacturer suffered from a decline in volumes and the high cost of borrowing.

“The strategy of maintaining high stock levels increased trading margins but interest charges resulted in an overall decline in profit,” Kingdom said.

While Phoenix experienced an increase in market share compared to the previous period, all the group’s units recorded a decline in volumes.

Phoenix’s has six business units which include Phoenix Brushware, J W Searcy, William Smith & Gourock and the print unit comprising Bardwells and RCP Belmont.

In a commentary accompanying the results, Phoenix said Bardwells and RCP Belmont, which were recently purchased from Apex Corporation, operated profitably at a trading level but the high costs of working capital resulted in a loss after finance charges. Kingdom said although Phoenix’s business units were performing well, the major factors affecting the group were low demand, shortage of foreign currency and reluctance by foreign creditors to offer credit terms.

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