Sundaymail Editor
Enacy Mapakame
Business Reporter
Zimbabwe Stock Exchange (ZSE) listed construction materials manufacturer Turnall Holdings Limited says it will focus on recapitalising its manufacturing plants to improve production efficiencies and product offering.
This comes as the company’s management is upbeat of maintaining the current growth trajectory while meeting demand, driven by increased activity in the construction industry.
One of the group’s focus areas is the resuscitation of the fibre-cement plant in Harare in order to increase production capacity.
“Management is optimistic that the business will continue to be profitable and maximise shareholders’ wealth.
“Key focus areas are to recapitalise the plants, improve production efficiencies, improve our product offering and reduce production costs,” said the group in an update for the half year to June 30 2022.
The group added that cost containment and business right-sizing will also remain top priorities to enhance profitability as profit for the half year period surged 584 percent to $526 million.
During the half year period, Turnall’s turnover jumped 38 percent, $2,6 billion, in comparison to the previous year. Sales volumes declined by 29 percent compared to the same period last year due to a change in the sales mix which favoured high value and low tonnage products.
“Sales were negatively affected by liquidity constraints and subdued aggregate demand. All sales earned in US dollars were recorded at the auction rate from January 2022 to April 2022 and the interbank rate thereafter,” said Turnall.
Production volumes dropped by 21 percent compared to the previous year and this was a deliberate move by management in order to align production to the sales demand.
According to Turnall, the gross profit margin for the year was 51 percent against the same period last year of 24 percent on the back of improved production efficiencies, cost containment strategies and a change in the sales mix.
Operating costs were 23 percent of turnover compared to 20 percent in the same period in the previous year. This increase is attributed to the general price increases experienced in the economy. Financing costs were $1,25 million compared to $1,35 million incurred in the same period last year.
Profit before tax jumped 402 percent to $672,5 million compared to $133,9 million recorded for the comparable period last year, mainly due to the notable improvements in the turnover value, gross margins and cost containment initiatives employed by management throughout this period.
Cash generated from operating activities rose 159 percent to $861,7 million. The company continued to invest in working capital in order to preserve value in this hyper-inflationary environment. Capital expenditure for the period was $119,3 million compared to $8 million spent last year and closed the period with no borrowings.
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