Astra Industries faces intense competition

Published: 22 November 2013

Astra Industries reported a flat set of results showing a 3% growth in revenue to $28.1m.

Sales volumes grew 7% and gross margins reduced from 35% to 33% mainly due to increased competition and rising input costs particularly in chemicals business. Sales volume for paints reduced by 5% compared to prior year mainly as a result of construction projects that were put on hold during the election period.

The group faced intense competition from local producers and imports. Despite a 9% increase in chemical sales, the volumes were still below acceptable levels due to slow recovery of the manufacturing sector and liquidity challenges in the economy.

Operating profit decreased 29% to $1.5 negatively impacted by increased selling and administrative expenses particularly wages. Profit after tax reduced to 22% as a result of increased costs however there was improved on the finance bill.

Total assets grew by 2% to $ 20.6m. Current assets remained unchanged at $ 9.4m and current liabilities declined by 9% to $ 4.7m. The operating cash flow was 22% down from $ 2m to $ 1.5m indicating that the cash position of the company is deteriorating.

The group anticipates growth through the introduction of Plascon flagship products and the development of export markets. However, Imara Edwards Stockbrokers analyst, Lilian Kugarakuripi, in her note to clients wrote, "We do not see growth in the coming year due to economic challenges that the country is facing and there is a limited chance that the company will recover."

Imara Edwards downgraded Astra from hold to a sell.
- businessdaily