Blue Label forks out $6.1m for Mexican subsidiary
Blue Label Telecoms has extended its financial assistance to Blue Label Mexico to $6.1 million.
In its most recent results presentation last month (August 2012), for the year ending May 2012, Blue Label said that, whilst Blue Label Mexico’s footprint expansion initiatives had accelerated at a vast rate through the Grupo Bimbo distribution network, the costs of gearing up infrastructure in support of the roll out of point of sale devices resulted in BLM incurring additional losses in the reporting period.
Blue Label Mexico commenced trading operations in August 2009. The current ownership structure is 40% Blue Label Telecoms Limited, 40% Grupo Bimbo SA de CV, and 20% Nadhari SA de CV.
Blue Label said in a statement on Friday (14 September) that the board of directors concluded that the company in Mexico satisfied the solvency and liquidity test.
“The loan was advanced to fund the company’s pro-rata contribution towards the working capital requirements of Blue Label Mexico,” it said.
Blue Label has endured mixed fortunes in its operations outside of South Africa. In August, the group said that Oxigen Services India had become a profitable entity for the first time in nearly a decade.
In Nigeria, Blue Label had its Multi-links contract cancelled in November 2010; however, it continues to incur losses.
The group is currently in an arbitration process to claim $481 million in lost profits from Telkom’s former Nigerian subsidiary. The arbitration has been set down for hearing from 4 November until 15 December 2012.
Blue Label recently reported a modest rise in revenue to R18.72 billion for the year ending May 2012, from R18.06 billion previously.
Operating profit improved to R658.92 million, from R451.75 million in 2011, while headline earnings per share increased by 40% from 46.20 cents to 64.65 cents.
However, the board approved a gross ordinary dividend of 23 cents per ordinary share, from a dividend of 14 cents in 2011.
Looking ahead, in Mexico, Blue Label said: “The distribution capabilities of Grupo Bimbo, the largest bakery in the world, are expected to add significant momentum to the roll-out of point of sale devices in Mexico.”
In noon trade on the JSE on Friday, shares in Blue Label advanced 15 cents, or 2.34%, to R6.55; however, the All Share Index climbed 1.70% to 36,495 points.
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