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TURNALL Holdings has reported “significantly below par results” with a $2,6 million loss for the year ending December 31, 2013 compared to a profit of $1,1 million the previous year but the group believes that a firm order book and growth in exports will offset last year’s negative position.
Gross profit was 24 percent compared with 29 percent in 2012, with an operating profit margin of 0,29 percent compared to 10 percent for the same period the previous year.
Turnall reported a negative profit margin of 7 percent against a positive 2,85 percent for the previous year. Operating profit was $124 000 compared to $4,32 million for the same period in 2012.
High production costs at $32,4 million from $30,1 million in 2012 resulted in margin decline. The group’s revenue at $42,9 million was just 1 percent above the previous year which was at $42,5 million.
“Owing to a number of domestic and external factors, 2013 was a very challenging year for operators in the manufacturing industry.
“The group’s results were therefore significantly below par,” Turnall chairman Mr Herbert Nkala said in a statement accompanying the 2013 financial results.
Demand for building products remained lower than expected due to low disposable incomes in target segments. This was worsened by a drought season which saw consumers shifting their priorities from construction, according to Mr Nkala.
Projects lined up for both water and sewer reticulation did not materialise as a result of funding limitations despite the company having received inquiries and orders while exports into South Africa were affected by price volatility due to the free fall of the rand thus limiting the group’s export volumes during 2013.
The group attributed the negative position to the adverse liquidity situation which it said will persist in the short term, thereby posing challenges in the collection of trade receivables.
However, the group believes that the additional line that was added to the business at the end of 2013, concrete tiles, has helped improve cash receipts as this is premised on a cash trading model.
“The fibre cement business which has traditionally traded on credit terms has also, since the beginning of 2014, been modelled around a similar cash trading model,” said Mr Nkala.
Mr Nkala said in the outlook, the group sees opportunities in the infrastructure upgrade in water and sanitation together with housing construction.
“Exports which grew from $1 million to $1,7 million continue to offer the greatest opportunity for growth despite the weakening of the South African rand. The group has a firm order book as well as inquiries from the export market,” said Mr Nkala.
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