ASTRA Industries Limited is anticipating a slowdown in profit growth next year, largely due to liquidity challenges and low investments, despite having posted an impressive 99% growth in operating profit in the full year ended August 31 2012.
Report by Gamma Mudarikiri
The company said negative the macroeconomic environment, characterised by low levels of liquidity, coupled with electricity shortages, relatively high operating costs and rising wage levels led to serious viability challenges for business.
In the period under review, the company’s operating profit surged to US$1,4 million, up from US$750 000 the same period the last year.
Revenue grew to US$27,1 million, increasing from US$22,7 million.
“In spite of negative factors affecting the economy, the company and its subsidiaries managed to achieve satisfactory results,” Astra said in a statement accompanying its financial results.
Sales volumes grew by 17% from prior year, helped by a 20% increase in Astra Paints volumes. The company, however, said gross margin recoveries remained marginally below those achieved last year.
Company MD McKenzie Mazimbe told businessdigest this week that they had opened new markets, supplying paint to mining companies such as Mimosa and Zimplats.
Sales volumes for the chemicals division, Astra Chemicals, also grew by 14% from the comparative period. However, shortage of raw materials in the period limited growth.
Gross margins for the division, however, marginally improved by three percentage points to 27%.
The Astra group added that the process by the major shareholder Finance Trust to dispose of its major stake was still ongoing.
Finance Trust invited new bids in September this year after the initial process, which commenced in 2011, failed to secure a buyer.
Astra early this year announced plans to lease its Astra Steel property as part of cost cutting measures. The company last year stopped operations on the loss- making steel making division also to contain costs