HomeBusiness DigestPhoenix expects handsome earnings

Phoenix expects handsome earnings

Conrad Dube

PHOENIX export earnings for the year will be higher than last year buoyed by huge demand at Scandia Wire for diamond mesh in Botswana and South Africa, chief executive office

r Francis Rodrigues has said.

Rodrigues said May and June had been good while volumes had increased by 5% in the third quarter ending July 31.

He said the company was sitting on about four months stock cover worth about $1,3 billion but debtors were just under $1 billion.

Rodrigues said the group’s export department had undertaken a trip to Angola.

“We are hopeful to clinch a deal with an agent but it is early days yet to reveal much,” he said.

In the six months to April, exports accounted for 22% of the group’s turnover of $3 billion, which the company said was a healthy increase from the 18% achieved for the year to October 2002.

Rodrigues said the group concentrated on increasing capacity in all its companies during the quarter investing close to $250 million during the quarter with $100 million going towards the acquisition of a new diamond mesh machine to satisfy outstanding export orders.

A further $80 million went towards the acquisition of a new machine that produces 5 000 and 10 000 litre tanks for the Premier Products division.

The company said the tanks were in huge demand in Botswana.

The chief executive said the difference was expended on buying assets of a company producing similar products to JW Searcy.

Although Rodrigues would not provide figures, he said Scandia contributed 35% to total turnover in the quarter spurred on by the introduction of the export support price and demand for diamond mesh from Botswana, which had exceeded capacity.

While the group’s best performer last year, William Smith and Gourock, was profitable on standard lines with volumes increasing on some product lines, the division was slowed down by lack of major contractual orders as major customers had not placed significant orders in the six months.

“A concerted export drive has been put in place to recover reduced local volumes and the division has added industrial gloves to their range of protective clothing,” said Rodrigues.

An investment analyst, Norman Maferefa, said Phoenix fitted very well in Angola, which is undertaking a postwar reconstruction because of the range of products the company offered.

The product range includes protective clothing, executive range of bathroomware, plastic storage tanks and diamond mesh among other products throughout Phoenix operating companies.

Maferefa said the dip in the group’s share price just after the announcement of results for the six months ended April 30 was a direct result of market sentiments towards Phoenix. He said the results were satisfactory and in line with analysts’ forecasts but “the market had high expectations which were not realistic”.

Phoenix shares yesterday closed at $120.

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