Norstar reports 26.2pc earnings growth

PUBLISHED : Friday, 13 June, 2008, 12:00am
UPDATED : Friday, 13 June, 2008, 12:00am

Car component maker Norstar Founders Group, reporting a 26.2 per cent increase in net profit for last year, said yesterday larger economies of scale and a 10 per cent price increase for higher-margin products should help offset rising raw material costs.

The company said it earned 509.88 million yuan in the year to March, but gross profit margin declined to 16.4 per cent from 17.6 per cent because of a stronger yuan. Sales grew 11.1 per cent to 3.89 billion yuan.

The company declared a final dividend of 6.5 HK cents per share.

'Surging oil and raw material prices must render an impact on the company, but we're still optimistic as we produce higher-margin products and plan to expand our capacity,' said Norstar chairman Zhou Tianbao.

Norstar's core businesses include suspension system assembly, lined brake shoes and disc brake pad manufacturing, as well as parts trading.

'We raised prices by an average of 5 per cent last year, and our fixed contract with Baosteel can assure us that steel prices do not get too high,' said executive director Dai Wei.

Norstar has allocated 200 million yuan (HK$226.07 million) this year for expansion and research and development.