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Livingstone Marufu
LISTED brick manufacturing concern, Willdale Limited expects a 10 percent surge in capacity utilisation following the acquisition of new equipment, refurbishment of old machinery and a deliberate strategy to trim operational costs.
The company is currently producing between 80 and 90 million bricks annually at 70 percent capacity utilisation and targets to increase the figure to 100 million during this year.
Willdale Ltd chief executive officer, Mr Nyasha Matonda told The Sunday Mail Business that the new equipment had resulted in improved production efficiencies.
“We have recorded a good profit (US$1,2 million for the year to September 2015 from a loss of US$600 000 in 2014) in this difficult economic environment coupled with stiff competition from other construction companies,” he said.
“Because of the acquisition of new machine and the refurbishment of the existing plant, maintenance and other costs will certainly go down.
“We continue to review our staffing levels and costs in order to further improve productivity and efficiencies,” said Mr Matonda.
Mr Matonda said the company, like many others, was battling employment costs and had terminated contracts of 40 employees in line with amendments to the Labour Act mid last year, paying off US$60 000 in packages.
The company now has a staff complement of about 600 people.
According to Mr Matomnda, in the year to September 30, 2015, cost management initiatives undertaken resulted in a 22 percent decline in the average production costs, compared to the prior year.
Net cash flows totaling US$50 000 were generated from operations despite the difficult operating environment.
Capital expenditure for the year amounted to US$32 700 and was financed through cash flows from operations.
The improved product supply capability helped restore confidence in the market, resulting in the company recapturing some of its lost market share.
Sales volumes increased by 40 percent compared to the prior year.
Willdale’s product mix remained skewed in favour of low margin common bricks.
This, together with increased competition in that product range, led to an 11 percent decline in average prices.
Revenue was US$8.8 million, representing a 25 percent jump from the prior year, driven by a 40 percent increase in sales volumes.
However, average prices declined by 11 percent.
The company expects to implement several initiatives in the new year in order to improve competiveness and regain more market share.
Willdale has increased its supplying capacity from 150 000 bricks to 200 000 bricks a month to independent contractors and top construction companies.
The brick manufacturer says there is great potential for growth in the construction sector and believes that the various measures put in place by Government through Zim Asset will soon unlock more value.
Online Reporter