ASTRA Industries earnings per share for the nine months to May 31 could be much higher than last year but, though volumes remained depressed, margins stayed “close” to first
half performance, managing director Nick Nyandoro has said.
Analysts have forecast a range of between $25 and $34,50 for the company’s earnings per share and attributable earnings of between $787 million and $1,3 billion for the nine months.
Nyandoro said: “We are glad that we have been meeting expectations as there has been no substantial drop or increase in volumes. Sales in all the group operating companies have increased to management’s expectations and in line with budgets.”
He said the group had managed to retain margins which had significantly increased in the quarter under review, but exports remained depressed in volume and value terms.
Attributable earnings for the period under review were in line with management forecasts though slowed down by the work stoppages in March and power outages.
On the order book, the managing director said: “nothing dramatically different from the first half experience but the company could benefit from gains in the forward planning of purchases which may not necessarily be repeated to the same extent in the fourth quarter.”
Astra Chemical and Astra Paints both contributed 41% each to group attributable profit with Henry Dunn Steel contributing the remaining 18%.
Commenting on the distilling company, NCPDZ, group financial controller Heritage Nhende said the unit’s performance was in line with other group companies.
Investment analysts have used sales in NCPDZ, a 51:49 joint venture with Hippo Valley Estates Ltd, as a yardstick for African Distillers (Afdis) performance, which is the distilling company’s sole customer.
Nyandoro said stock levels were manageable at levels between three to five months cover, as the company did not intend “to go over board in our buying”.
He said there were no significant outstanding accounts on the debt book, a reflection of the group’s strict credit control measures.
The group has restructured its top management to have more people involved at higher levels of the organisation, according to Nyandoro, with Astra Paints and Henry Dunn Steel general managers reporting to an operations director unlike in the past where the generals managers reported direct to Nyandoro.
He said: “Boniface Mabika has been appointed Astra Paints general manager while Lovemore Marozva has taken over from John O’Brien. The two general managers report to the operations director, Mac Mazimbe.”
Nyandoro said the restructuring would help firmly position the group in the regional expansion programme.
He said Astra Paints one of the group’s operating companies was pursuing exports to Angola where a contribution to earnings was expected in the last quarter of the year.
Although Nyandoro said the overall increase in performance was not what management expected, analysts said the group’s share price was undervalued and was yet to reach top value.
“The group’s strategy of stocking well before hand is paying off as they acquire at cheaper prices only to resell at prevailing prices well above what the group would have spent. Volumes in the group are constantly rising as people continue to build,” said an analyst adding that the continuously booming property market benefited the Astra group.
Astra shares have gained 36% over the past week to close at $300 on Tuesday this week.
The analyst said the share was likely to record more gains going forward as brokers seek to take positions in the last quarter.