Astra Industries Limited has closed down its perennial loss making steel division Astra Steel & Engineering Supplies, following years of poor performance. The group shut down the business in a bid to stop further negative impact on the rest of the group and its closure is expected to improve company profitability.

Group chairman Dr Charles Utete said that the division had incurred losses for a number of years and the group found it prudent to stop any more negative impact on the rest of the group by this division.

He said that "Since the introduction of the multiple currency trading system, Astra Steel had been reporting trading losses every month, to the detriment of the group. It has to be noted that the steel division, even during prior periods when it reported trading profits, was never a significant contributor to the group's profitability."

In a statement to shareholders for the year ended August 31st 2011, Dr Utete said that major shareholders Finance Trust of Zimbabwe, a 100% subsidiary of the Reserve Bank of Zimbabwe, was in the process of offloading its stake in the group.

Finance Trust controls 63.9% of the issued shares in Astra. It is understood the RBZ would want to use the proceeds to retire its debt. Barloworld, through Cyrus, is the second largest shareholder and Equivest has been aggressively building a stake.

For the year, Astra turned over USD 23.7 million and managed a profit for the year of USD 930,069 from continuing operations while a loss of USD 509,611 was incurred from discontinued operations.

The group had forecast a 30% increase in turnover to USD 26 million in the year to August 2011, with a gross margin between 32% and 35%. The group said operations aggregate volumes increased by 23%. But pressure on margins resulted in a lower increase in sales of 21% over 2010.

(Sourced from www.allafrica.com)