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Livingstone Marufu
LISTED tyre maker National Tyre Services Ltd (NTS) says it is aiming to return to profitability next year on improved product offering, branch network expansion and stronger cost cutting measures.
NTS slumped to a net loss of $165 000 in the six months to September 2015 compared to a net profit of $32 000 the previous year.
The waning fortunes have been a result of declined sales margins.
Revenue for the period under review dropped 11 percent to $6,7 million from $7,5 million a year earlier.
NTS chairman Mr James Moyo said the company will offer more budget brands in 2016.
They are hoping the strategy will create economies of scale to boost sales.
“Pivotal to its growth strategy, the company will extend its product range to include more value offerings, manage supply chain to ensure key products availability while continuing to rationalise and improve branch network,” he said in NTS’ half-year financial results statement.
“This will be complemented with cost containment measures as the company focuses on returning to profitability in the new term,” said Mr Moyo.
According to the NTS website, the company operates nine retail outlets countrywide. They manufacture and distribute tyres, supply motor vehicle accessories as well as provide fitting and wheel alignment services.
The company is also a distributor of Dunlop and the sole agency for Yokohama tyres in the country.
After opening two branches in Mutare and in Harare in September and November respectively, NTS is aiming to open more stores to improve efficiency in service delivery.
“In response to market needs, growth was recorded in sales of budget brands,” said Mr Moyo.
“However, there was an overall decline in units sold due to several factors, including the unavailability of specific product lines. Procurement lead times and intense price competition in the market contributed to the slowdown.
“The company implemented initiatives to address these recent developments and the results are beginning to show.
“A review of our branch network configuration was undertaken in order to improve accessibility and convenience to customers.
“The company was slow to respond to market dynamics, resulting in a drop in units as a result of consumers switching to cheaper new tyres and low priced retreads being offered by competitors,” he said.
NTS is currently negotiating with its rubber suppliers to expand its offerings.
The chairman said sales have already started to improve with the coming in of value rubber that is used on off-road tyres.
Value rubber will also cushion the impact of the declining price gap between premium retreads and bottom tier truck tyres.
Online Reporter