ASTRA Industries Limited after-tax profit declined by 22% to $1, 2 million for the year ended August 31 2013 due to increased finance costs.
Revenue increased to $28 million in the period under review as compared to $27 million in 2012.
In a statement accompanying the group’s audited results, Astra Industries chairperson Addington Chinake said operating profit declined to $1,5 million from $2,2 million in the same period last year.
“Operating profit at $1,5 million was negatively impacted by increased selling and administrative expenses particularly wages, and was 29% down from last year,” Chinake said.
Chinake said sales volumes grew by 7%, but gross margins came under pressure, reducing from 35% to 33% due to increased competition and rising input costs particularly in the chemicals business.
“The macro-economic challenges experienced in the previous years persisted this period, and were further aggravated by the focus on elections resulting in the period under review being characterised by significant slowdown in businesses countrywide,” Chinake said.
He said in operations, sales volumes for paints declined by 5% compared to last year owing to the fact that a number of construction projects were put on hold due to the elections while competition for the available small market was intense from local producers and imports.
Chemicals sales volumes grew by 9% but at reduced margins.
“Despite the growth in volumes, they were still below acceptable levels due to slow recovery of the manufacturing sector and liquidity challenges in the economy,” he said.
Chinake said a strategic alliance with Kansai Plascon which now has a significant stake in the business, offers opportunities in terms of introducing the Plascon flagship products, developing export markets and operational synergies in the paints business.
He said the group would continue to focus on cost containment and efficient working capital management to create value for its shareholders.
Meanwhile, Finance Trust of Zimbabwe disposed its entire stake of 63, 25% shareholding in Astra Industries Limited and the shares are now held by Kansai Planscon Africa Limited with 38, 25% and Hemistar Investment Limited 25%.
Hemistar Investment Limited is an investment company owned 51% by Astra Industries Limited management and staff and 49% by Kansai Plascon Africa Limited.