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Astra’s positive 2017 forecast is based on cost cutting measures and price increases that are in line with cost increases

Conrad Mwanawashe Business Reporter
KANSAI Plascon Africa’s Zimbabwean unit, Astra Industries, has seen a general decline in volumes and profits since takeover by the Japanese group, but says because of a very low base last year, 2017 is forecast to register growth. The positive 2017 forecast is based on cost cutting measures and element of price increases in line with cost increases.

Kansai Plascon Africa acquired Astra Industries mid-way through 2013 and changed the year-end from August to December resulting in that year constituting 16 months. In 2014 volumes were around 20,4 million litres but have declined to about 15,7 million litres being forecast for this year. The company recorded 17,3 million litres and 17,1 million litres in 2015 and 2016 respectively.

Turnover, however, is forecast to register a five percent growth to $29,4 million from $28,1 million recorded last year. However, the forecast for turnover growth remains behind the 2014 level of $32,3 million. Operating profit is forecast to grow to $2,3 million this year from $1 million recorded last year, but is still below the $2,7 million recorded in 2014.

“The performance has not been great for the Zimbabwean unit due to macro-economic conditions deterioration since the take-over,” Astra Industries managing director Heritage Nhende said.

He said foreign currency shortages to service foreign suppliers was one of the major challenges for the group.

“The last few months have seen the group accessing less than 20 percent of its needs and has survived end of October due to stocks that had been mainly on hand. Going forward it will be more difficult,” said Mr Nhende.

Astra Paints, as in the past, has been the star performer for the Zimbabwean operation but NCP Distillers Zimbabwe is “showing growth owing to it being not reliant on imported inputs.”

“The shortage of foreign currency has necessitated local customers who were importing to revert to us,” said Mr Nhende.

Exports have not been performing well because Zimbabwean products are not competitive on the external market because of high cost base.

“We are not competitive on the export markets even for portal alcohol due to a high cost of crude ethanol from Triangle. The few exports are being done at very low margins -below five percent – just to generate some foreign currency,” said Mr Nhende.