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Turnall Holdings Limited said sales volumes for the third quarter and nine months to September 30, 2019, went down 31 percent as the market grappled inflationary pressures that resulted in waning disposable income.
In a trading update, the year to date sales volumes were 28 percent below the previous year comparative period.
Turnall attributed the decline in volumes to low aggregate demand, since the business was adequately stocked during the period under review. However, unaudited management accounts for the nine months period on a historic cost basis indicate profits significantly higher than the comparable period of 2018 while total net borrowings have been reduced to below 10 percent of capital employed.
During the period under review, Government implemented currency reforms. The use of the multi-currency system was abolished for local transactions following re-introduction of local currency.
This is in addition to floating of the exchange rate, a move that was expected to help stabilise the exchange rate, improve availability of foreign currency as well as restore confidence in the economy.
However, the value of the Zimbabwe dollar, which was reintroduced in February, deteriorated significantly during the quarter, which saw prices of major commodities in the economy increased in response to the declining exchange rate between the Zimbabwean dollar and US dollar.
This, coupled with power shortages and limited access to foreign currency added to industry-wide woes that saw production reducing while costs increased as companies resorted to alternative sources of power.
“There were significant price adjustments for electricity and fuel, which in turn affected pricing of most goods and services in the economy.
“The group increased the selling prices of its products in line with inflation. However, disposable incomes in the economy lagged inflation, leading to a decline in demand for the group’s products.
“The group also faced challenges in accessing foreign currency from the interbank market and this affected the timely importation of raw materials and spares, thereby impacting product on efficiency,” said Turnall.
During the year, Turnall embarked on a regional export strategy as part of efforts to improve foreign currency earnings as well as offset the declining sales volumes on the domestic market.
In terms of contribution, export sales volumes for the quarter improved to 2,8 percent of sales volumes compared to 0,2 percent in the previous year comparable quarter.
Export sales volumes for the nine months period contributed 2,5 percent of sales volumes, an improvement from 0,1 percent in the previous year comparative period.
Online Reporter