JSE-listed Blue Label Telecoms has reported a 6% improvement in headline earnings to R451m in the year to May 2014. This came on the back of an improvement in gross profit margins from 6,7% to almost 7% and a slight uptick in revenue to R19,4bn.

Losses at its Mexican business, however, acted as a drag on earnings.

Cash flows from operating activities were R907m, and the board has elected to increase the dividend to shareholders by 8% to 27c.

It says the improvement in gross profit margin was due mainly to the application of cash resources to the bulk purchase of inventory at favourable rebates and early supply settlement discounts. It also earned better commissions on the distribution of prepaid electricity, with turnover generated on behalf of utilities growing to R8,8bn.

The company’s Mexican operation, however, was a drag on profit, pulling down headline earnings by 9c/share.

“Expenditure incurred by Blue Label Mexico on the roll out of point of sale devices on a national scale is in line with its strategy to enhance its product and service offerings, the benefits of which are expected to materialise in the future,” Blue Label says.

At the end of the financial year, 91 409 point of sale devices had been installed in Mexico.

Margin growth in South Africa slowed due to “competitive forces” in the company’s most profitable segment, distribution, and due to higher costs incurred.