Mechanical Lloyd posts impressive results

Mechanical Lloyd Company Limited, a major Automobile dealer in Ford, Massey Ferguson and BMW brand on Tuesday held its annual general meeting at the International Conference Center in Accra.

The meeting was to review the company's overall activities which affected the financial status and the company's general performance. Addressing the gathering, the Chairman of the company, Mr. Charles B.K Zwennes indicated “figuratively” that 2008 being an election year was going to be a challenge for the government to maintain fiscal discipline, and the situation had been exacerbated by external shocks that resulted in unprecedented high world food prices with some staples going up by as much as 30%-40%.

Crude oil prices fared even worse, reaching a peak of $147 a barrel in July, and averaging abut $98 per barrel through out the year.

He said the government in a bid to soften the impact of these astronomical price increases on the populace moved to subsidize them at a great cost to the national budget.

Together with projects like the CAN 2008 Soccer fiesta, which was a financial failure, and the holding of several International Conferences, government expenditure blew out of proportion, resulting in a huge fiscal deficit of around 14% of GDP, with devastating consequences on inflation which then crept up from 12.75% in December 2007 to 18.1%, as at December 2008.

Mr. Zwennes noted that the Bank of Ghana responded by correspondingly inching up the prime rate from 13.5% to 17% as at December 2008 and with this situation, coupled with widening balance of trade deficits, mainly on account of the high world crude oil prices, caused a serious erosion in the country's reserves, and triggered the depreciation of the Cedi, which by December had lost about 22% of its value against the dollar.

He said in the mist of these numerous challenges the company did not sit aloof but rather managed a few significant gains which includes an annual turn over of GH¢25.8million, which was an increase of 19.35% over the figure of GH¢21.7 million for 2007 and motor vehicle sales improved by 21%, spare parts sales and workshop earnings component of turn over improved by 15% and rental income from investment property increased by 14%.

He said Gross profit margin declined from 20% in 2007 to 19% this year due to the lower margins the company made on government orders won, and the re-export of Ford vehicles to Burkina Faso.

Selling and administrative expenses generally increased by GH 1.40 million or 38% and the major components of this increase were a stock write-off of GH¢203478, in respect of obsolete and slow-moving parts, and an increase in bank charges by GH 266,175 on new banking facilities negotiated. In addition GH¢460,151 was attributed to exchange loss following the rapid depreciation of the cedi against the dollar and the Euro during the year.

He stated an over all performance for the year after adjusting for other Operating Income of GH¢574,403 (2007: GH¢537,478), made up of fees and sales commission earned from DAF Bus, and other income of GH¢155,133 (2007: GH176405), yielded a Net Profit before tax of GH¢1.6million (2007: GH¢ 2.1milion) and a Net Profit after Tax of GH¢ 1.4million, which is 9% below the 2007 figure of GH¢1.6milion.