UML records Rs. 519.7 m profit after tax

United Motors Lanka PLC (UML) completed yet another successful year, sustaining its consistent record of profitability and growth and the Group as a whole, earned its highest ever profit in the financial year 2007/08 reporting a profit after tax (PAT) of Rs. 519.7 million which is an increase of 21.2 per cent over the previous year.

The parent company, UML, reported a turnover of Rs. 5,664.6 million which reflects a growth of 37.5 % over the previous year whilst the group turnover of Rs. 8,395.1 million recorded an increase of 24.5%.

UML has maintained a healthy balance sheet with a strong reserve base of over Rs. 2 billion.

In addition to the strong financial performance, the company rationalised some of its business operations during the year, trimming costs and improving efficiencies, all of which contributed to the increase in profitability during 2007/2008

The high finance cost was one of the biggest challenges the company faced, escalating by over 200% and sharply increasing the stock holding costs.

The depreciation of the rupee against the Japanese Yen by approximately 11% particularly in the latter part of the year increased the cost of vehicle imports. High inflation and the high cost of borrowings impacted on the purchasing power of customers, which in turn affected sales in the passenger vehicle segment.

A notable feature in 2007/08 was the incremental profit earned as a result of supplying 1,120 Mitsubishi vehicles by UML, to senior Government officials who were eligible to import vehicles on concessionary terms.

The market for trucks continued to grow last year, and Mitsubishi Fuso Canter held a 56% market share in the brand new Japanese truck segment.

This segment of the business recorded a sales growth of 70% last year.

UML as throughout the years retained its focus on the core business of selling brand new Mitsubishi vehicles as the sole distributor for Mitsubishi Motors Corporation of Japan and providing after sales services to Mitsubishi vehicle users.

However being responsive to the changing environment and as warranted by business strategy the company has, over the years, diversified its business portfolio and as a result now has five subsidiary companies and a diversified jointly controlled entity in the Group.