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Diesel Motor Engineering Company Ltd's (DIMO) vehicles segment had performed well during the financial year 2001/2002 despite the Government's limitation of import of vehicles under its duty-free scheme.

According to the Group's Annual Report the vehicles segment tripled its turnover, and contributed most to the increase in Group turnover from Rs.1,844 million in the previous year to Rs.3,405 million in the year under review.

"The resurgence in sales of commercial vehicles and significant growth in passenger car sales combined to substantially increase group turnover.

This was achieved against the backdrop of increases in registrations of private cars and buses/goods transport vehicles by 43 percent and 30 percent respectively. All segments other than construction and material handling machinery recorded increases in turnover.

The vehicles and vehicle parts and service segments recorded the highest increases of 203 percent and 37 percent respectively," the Annual Report said. The Group's profit before Tax increased by 52 percent to Rs.58.9million (Rs.38.7 million in 2001/2002), partially recovering from a 68 percent reduction recorded last year.

"Intense competition and aggressive marketing on commercial vehicles and the appreciation of the Euro, in which imports of passenger cars and related products are denominated, exerted pressure on margins.

The reduction in the Group's gross profit ratio from 31 percent last year to 22 percent reflects the substantial increase in vehicle sales, which carry relatively low margins," the Annual Report said.

DIMO Chairman S. Mendis said the unsatisfactory performance of the construction and material handling segment and other loss-making businesses has highlighted the need to review strategic direction and the alignment of business units within the Group. "This is being facilitated by a well-recommended firm of consultants," Mendis said in the Annual Report.

The market price of a Dimo share increased by 67 percent during the year, against a growth of 20 percent in the All Share Price Index. Market capitalisation of the Company as at March 31,2003 was Rs.300 million, compared with Rs.180 million as at March 31, 2002.

"Earnings per share for the year were Rs.6.47 (Rs.4.71 in 2001/2002). Return on Average Capital Employed and Return on Average Sharehoders' funds were 12.5 percent (12.6 percent in 2001/2002) and 6.5 percent (five percent in 2001/2002) respectively. The proposed First and Final Dividend of 30 percent is a reflection of the commitment to maximising shareholder returns. The dividend cover was 2.2 times," the Group's Annual Report said.

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