Construction of cluster homes to drive Willdale Limited’s profitability

LISTED brick-making firm, Willdale Limited, says heightened activity in the construction sector evidenced by cluster home development, educational infrastructure and shopping centres dominating the list of projects is set to provide the critical mass to meet set targets for the year.

Demand for bricks is highly driven largely by the construction of cluster homes in urban areas, the firm said.

The firm is engaged in making and selling clay bricks and their products include common bricks, face bricks, semi-faced bricks, and paving bricks.

In its trading update for the quarter ended December 31, 2023 the firm said building projects have continued to increase into Q2 with cluster home development, educational infrastructure and shopping centres dominating the list of projects.

“These should provide the critical mass to meet set targets for the year. The ongoing initiative to unlock value from certain assets should provide resources to increase capacity, competitiveness and profitability,” it said.

It notes that the upsurge in construction projects presents opportunities for real growth despite increasing competition, especially in the common brick market.

To that end, it said strategies are being pursued to improve the product mix and maximise margins from high value brick varieties.

The country is experiencing a major construction drive that is now evident in the housing boom in residential and non-residential infrastructure.

The Government has been the biggest player driving the boom in construction through its massive public infrastructure projects being implemented countrywide, complemented by several private sector players and individual construction projects, which has driven business activity across the industry and its value chains.

The Government is investing heavily in the construction of highways, dams, irrigation facilities, schools, colleges, clinics and hospitals.

Willdale added that the business remains viable, with a model that continuously provides the required working capital to support operations.

Therefore, the focus remains on managing costs, margins and cash flows.

In the period under review, production declined by 16 percent citing electricity load shedding.

“As a result, sales volumes dropped by nine percent compared to the prior year. Demand for bricks remained high though, driven largely by construction of cluster homes in urban areas,” it said.

Revenue for the quarter increased by 130 percent in hyperinflation terms and by 835 percent in historical terms compared to the prior year.