Cargo Carriers earnings down
Fin24 - May 20th 2011, 09:16
Johannesburg - Logistics and transport company Cargo Carriers [JSE:CRG] on Friday report a decline in headline earnings per share (Heps) to 48.5 cents for the year ended February 2011 from 118.8 cents a year ago.
The company said overhead costs relating to business establishment of new contracts gained, an increase in the wage costs which was higher than inflation and a provision raised for bad debt of R4.7m created for a loan owing by an associate company, contributed to the 32.7% decrease in earnings per share of 32.7% and 59.2% decline in Heps.
Revenue was up 21% to R538.3m, but operating and administrative costs were 21.4% higher at R326.5m.
Atrributable profit declined to R16.9m from R24.8m.
The company said the increase in revenue was pleasing in light of its long term growth strategy. Operating and administration costs have increased in line with revenue notwithstanding the increases in fuel and labour related costs.
The decline in earnings was further compounded by the group's high effective tax rate that reflected losses incurred in subsidiary companies for which no deferred tax assets have been raised, and the reallocation in the current period of the fair value adjustment to owner occupied property to the asset revaluation reserve, which was expensed in the prior year.
The group continued with its plan of disposing of non-operating assets to enable cash generation for further capital expansion and acquisition opportunities. Further non-core assets have been impaired and re-classified to 'non-current assets held for sale' with the intention of disposing of them within the next 12 months, it said.
Looking ahead, the group remains positive about the coming financial year and expects its new contracts to generate the required level of returns.
A major restructure of the agricultural operation's management team was also implemented during the current period and this is expected to lead to improved results, however, weather patterns remain a significant risk.
"The group's long term strategy of growth remains a key focus initiative," it said.
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