Published: 02 May 2019

GENERAL Beltings (GB) has slipped back into the red after registering an operating loss of $323 000 in the year to December 2018 against a prior year operating profit of $6 000 due to high finance costs.

Godfrey Nhemachena, the company's chairperson, said finance costs were 24 percent higher at $243 000 compared to $195 000 in prior year due to interest charges on legacy debt.

In the period under review, GB's gross profit stood at $1,4 million, a three percent improvement on prior year's $1,3 million profit as a result of improved throughput in the Chemicals Division and favourable product mix at the Rubber division.

Nhemachena said despite the persistent economic challenges, the company was focused on improved value chain and operational efficiencies.

"Notwithstanding curtailed activity in the last quarter, the turnover at $4,74 million was in line with prior year's $4,75 million with both divisions complementing each other," he said.

He noted that throughout the year, the company defended its market position through delivering a commensurate value proposition to its customers underpinned by improved operational efficiencies.

During the year, group operating expenses at $1,72 million were three percent above prior year's $1,65 million despite inflationary pressure on expenses and partial reinstatement of salary cuts in the last quarter of the year.

"As a result, an operating loss of $323 000 was recorded against a prior year operating profit of $6 000," Nhemachena said.

In terms of divisional performance, volumes at the rubber division dropped 11 percent to 257 metric tonnes compared to 289 metric tonnes due to foreign currency constrains for raw materials procurement.

"Owing to the need to realign the business with the new operating environment there was limited invoicing despite a firm order book. The strategic partnerships enable the division to compete in the industry as improved efficiencies reduced costs and turnaround time," Nhemachena said.

He said turnover at $2,3 million was a 17 percent reduction from prior year's $2,77 million as orders were carried over into the ensuing year.

Turnover at Cernol, the chemicals division, increased 37 percent to $2,42 million although volumes declined 16 percent due to a favourable product mix.

"The performance was underpinned by market consolidation in the traditional markets and benefits from the technical partnerships. Operating costs increased 23 percent due to partial reinstatement of the wage cuts in compliance with statutory requirements," he said.

Nhemachena said renewal of technical partnerships in the year and existing synergies within the company are expected to deliver improved performance in 2019.
- dailynews

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