Diesel and Motor Engineering PLC (DIMO) has reported a net profit increase of 31% year on year for first half of the year to Rs.72 million.
According to the company's interim report for the six months ended 30th September 2008, its 2Q09 net profits are up by 17% year on year to Rs.55 million. The company's gross profit margins have improved year on year despite a sharp year on year decline in turnover.
Furthermore, the company's land for its property plant and equipment was revalued on 30th September 2008 by an independent valuer. The interim report stated that the result of such revaluation was incorporated in the quarterly financial statement. The revaluation surplus amounting to Rs.824,090,448 was transferred to the revaluation reserve.
DIMO's Chairman, Managing Director and CEO A.R. Pandithage noted that the Group recorded a 31% reduction in turnover in comparison to the corresponding period of the previous year. However, he said the impact of this reduction was mitigated by strategies adopted by the Group which resulted in a 14% increase in pre-tax profit for the period. He added that lighting and power tools, construction and material handling and diversified activities were the segments which demonstrated both growth in turnover and profitability. Vehicle parts and services recorded a growth in profitability during the quarter under review.
Mr. Pandithage said interest rates continue to remain at a high level with the average weighted prime lending rate for the six months under review averaging 18.69% compared to 17.44% during the corresponding period of the previous year. He noted that the company has adopted stringent control measures over working capital management in order to alleviate the impact of high cost of bank borrowings. With the current meltdown in the global financial markets and the world economy displaying indications of slipping into recession, he anticipates that the next two quarters will be very challenging.