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Blue Label ups profitability

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In a period in which Blue Label rationalised businesses within its operating segments, contained expenditure and maximised on the benefits of healthy cash reserves, the net profit after tax increased by 9% and core profitability by 7%.

A maiden dividend was declared in August 2010 and Secondary Tax on Companies (STC) was paid during the half-year to November 2010. On a comparative basis, growth in net profit after tax and core earnings pre the STC payment was 14% and 11% respectively.
Off a strong balance sheet, working capital was managed efficiently. The procurement of inventory was maximised, additional credit was extended to selected long standing channels of distribution and the group capitalised on bulk purchasing and settlement discounts.
Although on a comparative basis overall gross profit margins declined, margins in fact exceeded those achieved in the second half of the 2010 financial year the South African distribution segment, the major contributor to group profitability.
With cash reserves averaging R1,9-billion, the deployment of cash to achieve additional discounts was a natural substitution for declining income earned from monies held on deposit due to lower interest rates.
Turnarounds in the Datacel group, Oxigen India and Ukash were other contributing factors to the growth in profitability.