Turnall posts US$3,9m profit

sectors in the period under review.
The company manufactures and supplies fibre cement, roofing and pipe products.
Turnall attributed its improved profitability to growth in a number of economic sectors, namely mining, agriculture and financial services, which in turn had a positive impact on the construction sector and infrastructure development in general.
Turnall chairman Mr Herbert Nkala said the improved economic environment as reflected in a Gross Domestic Product growth of 9,3 percent came largely from the growth in mining, agriculture and the financial services sector.
“The construction industry, while growing a mere 1 percent, saw increased activity levels in the mortgage-backed property development sector.
“These initiatives and the proceeds from tobacco and cotton pushed home construction and other infrastructural upgrade activities to a three-year high.”
Turnall achieved a turnover from continuing operations of US$51,9 million, a 48,8 percent increase from the previous year.
The firm said export contribution to the overall revenue growth at 3,2 percent, was on the low side due to delays in the commissioning of the Newtech Plant.
Early commissioning of the plant would have benefited the company in respect of exports of the Newtech products.
The plant was, however, commissioned in November with initial exports going into South Africa.
The non-asbestos plant, acquired from Italy using a loan facility from the PTA Bank, has the capacity to produce 35 000 tonnes of Newtech products annually.
Turnall exports its products to South Africa, Mauritius, Malawi, Mozambique, the United States, Botswana and Namibia.
Operating profit from continuing operations stood at US$7,4 million representing an increase of 40 percent compared to the same period last year.
The firm’s operating margins were negatively affected during the period under review at 14,2 percent, which was below the prior year margin of 15,1 percent.
Turnall currently imports 100 percent of its chrysotile fibre requirements from Brazil and Russia at a higher cost of               US$1 200 per tonne, which is almost double the local price of US$690 per tonne, because the local mines are not producing the commodity.
Cement, which makes up 70 percent of the raw materials, is sourced locally and the prices are stable at US$200 per tonne.
Chrysotile, however, constitutes only 10 percent of the raw materials. Profit-before-tax of US$5,1 million was achieved, representing an increase of 5,4 percent over the same period last year after finance charges of US$2,2 million.
The company closed the period with net short-term borrowings of           US$11,8 million comprising US$9,3 million secured largely for the purposes of purchasing chrysotile fibres from Brazil and Russia and US$2,5 million representing the current potion of the PTA loan for the Newtech Plant.
On the other hand, volumes produced during the period under review amounted to 83 910 tonnes which is 23 percent more than the previous year.
Turnall reported export volumes of                  3 312 tonnes, which grew by 18 percent from the same period last year.
A total of 4 700 tonnes of pipes were produced, representing a 55 percent increase from the previous period, with growth mainly coming from water and sewer reticulation projects that were undertaken by local authorities and the Zimbabwe National Water Authority.
Targeted infrastructural projects in the outlook period should further benefit the company.
It is also anticipated that improvement in the local financial services sector will drive local construction growth as mortgage lending and funding for infrastructure projects increase.
Turnall management is also looking at taking advantage of infrastructure projects outside Zimbabwe’s borders.
“Growth in export volumes is also anticipated from regional markets given the number of projects that are underway in South Africa and elsewhere in the region.
“The company is excited about the prospect of growing exports into the region during 2012. We continue to target the South African Rural Development Programme (RDP) housing projects and to date we have made inroads into this segment.
“Supplies into a 6 500 housing unit project valued at R15 million in KwaZulu Natal started this January,” said Mr Nkala.
Turnall is one of the few manufacturing concerns with a significant level of capacity utilisation at around 75 percent, compared to a sector average of 57 percent according to the latest Confederation of Zimbabwe Industries survey.