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Business Reporter
Shelter and pipe products manufacturer, Turnall Holdings’ turnaround process which began in September 2014 has begun to pay dividends as it returned to profitability in the year to December 31, 2015. The group posted a profit of $106 938 which was a recovery from a loss position of $11,9 million in the prior year. The performance was largely due to the group’s decision to diversify its suppliers which resulted in significant cost saving on key inputs especially chrysotile fibre.
Revenue, however, declined 14 percent to $29,02 million while cost of sales were lower at $22,4 million from $32,3 million resulting in a significant jump in gross profit from $1,46 million to $6,58 million during the period under review.
The group said improvement in gross margins came mainly from procurement initiatives.
“Selling and distribution expenses at $1,4 million were 26 percent below prior year, while administration expenses at $3,8 million were 71 percent below prior year due to strict cost control measures put in place and the elimination of non-recurring expense line items which impacted the prior year.
“Financing costs decreased by only 6 percent and the achievement of a material reduction in borrowing costs in 2016 is a key priority,” the Group said.
Total borrowings for the group increased by $1,8 million mainly due to $3,5 million owed to FBC, which was converted from a trade payable to a secured loan.
“This increase was offset by repayments made during the year of $1,7 million. Management will continue to seek long term solutions to address the group’s liabilities position,” it said.
In terms of operations sales volumes declined 9 percent from 69 052 tonnes in 2014 to 62 898 tonnes during the period under review. According to the group endurite sheets continued to be the flagship product contributing 56 percent in volume and 64 percent in value terms while concrete tiles contributed 35 percent in volume and 14 percent in value which was a significant improvement from the previous performance when they contributed 30 percent and 11 percent respectively.
Looking ahead the Group said it was looking forward to a positive impact of partnerships that it signed this year on its financials for this year.
Turnall signed exclusive distributorship agreements with leading international manufacturers of Poly vinyl Chrolide (PVC), High density Polyethylene Pipe Systems (HDPE) and Glass Reinforced Plastic (GRP) pipes to complement its own asbestos cement pipes range.
The group is also expecting to reap further rewards from a combination of rightsizing the business, further cost reduction and capturing market opportunities.
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