Chronicle Editor
Nqobile Bhebhe, Senior Business Reporter
ROOFING and piping materials producer, Turnall Holdings, says it is focusing on scaling up recapitalisation of its operations in a bid to meet growing demand for various products.
In its trade update for the year ended 31 December 2021 the firm said it achieved a turnover of $2,1 billion, which was a 31 percent increase compared to the preceding year in inflation adjusted terms.
Sales volumes grew by two percent compared to the same period last year. This saw it declaring a dividend for the first time in 14 years.
The business performed well despite the impact of the Covid-19 lockdown measures, liquidity constraints, subdued aggregate demand and pricing challenges due to exchange rate disparities, which were in place throughout the year, it said.
“There will be an increased focus going forward on re-capitalising the plants, improving production efficiencies and reducing production costs,” said the company.
“Plans are underway to invest in a new plant and resume production of roofing sheets in Harare. This will augment the Bulawayo plant in line with the increasing demand for the company’s products, while improving customer service further and reducing Turnall’s costs of shipping finished products to its largest market,” reads part of the report.
To bring diversity in its range of products, the firm will commission a Glass Reinforced Plastic pipe plant.
“This new large diameter pipe plant should play a critical part in the Government’s plans to both create manufacturing jobs and bring improved water supplies to the country,” it said.
“The new plant will also reduce the country’s requirement for scarce foreign currency by replacing imported pipes with local production and provide a solid base for new export opportunities into the region.”
The company said it priced its products in both US dollar and local currency and used the funds to finance its working capital requirements.
“These funds were used to import raw materials and spares for use in production. The gross profit margin for the year increased to 41 percent against the same period last year of 33 percent as a result of cost containment strategies and the business restructuring exercise implemented during the year,” said Turnall.
“Pricing issues have been a major challenge particularly on the export market owing to the depreciation of the currencies within the region against the United States dollar (USD).
“The business switched to pricing exports in USD in order to eliminate this exchange rate risk. Financing costs, at $1,6 million, declined by 72 percent compared to the prior year. The profit before tax was $422,3 million compared to $264,4 million achieved in the preceding year.”
In the period under review, the firm managed to pay off loans and funded its operations from internally generated cash flows, which improved significantly compared to the same period last year. The company generated $651,5 million from operating activities before working capital changes.
“This was a 27 percent increase from the previous year. The company invested $402,7 million in working capital, up from $261,1 million in the previous year in order to boost volume growth,” said he company.
“This investment was mainly in respect of the purchase of raw materials. The net capital expenditure for the period declined from $189,5 million to $16,9 million in 2021 pending significant capital expenditure on major new plants in 2022 and 2023.
“The BancABC loan was repaid in January 2021. We continue to apply an integrated approach in managing our sustainability impacts and opportunities.”
The firm said Government projects and tenders, which it pursued in 2021 will change production and sale figures as it plans to reclaim its position as the lead producer of roofing materials.
“In order to mitigate the challenges with the current pipe plant, the group is investing in a GRP pipe plant, which will enable 21st century pipe production. This pipe will serve all new housing and local authority sewer and water reticulation systems,” said Turnall.
“The pipe will also be used for moving water from dams to local authorities as well as for irrigation purposes. It is a strategic export product in the Sadc region and is the future of infrastructural pipes,” it said.
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