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Kumbirai Tarusarira
Average price increases managed to offset a drop in volumes by the Zimbabwe Stock Exchange (ZSE) brick making firm, Willdale, after it recorded an 8 percent jump in revenue for the year ended September 31, 2019.
The brick company reported turnover surge of 8 percent to $65 million propelled by 207 percent increase in prices, it said in its full year financial results.
The pricing regime in Zimbabwe is largely linked to the exchange rates and prices of most goods and services rose sharply following liberalisation of the exchange rate in February last year.
Monthly inflation rose to 39,9 percent in June this year before it dropped to 17,5 last month on the back of stability of the exchange rate and the decline in broad money supply growth.
Zimbabwe suspended the publication of annual inflation figures but some independent analysts believe it reached 467 percent in November.
“There has been a significant contraction in the construction sector due to the shrinking of disposable incomes, which have been eroded by inflation and this obviously resulted in 23 percent drop in volumes,” said an analyst with a local research firm.
Operating profit rose by 335 percent to $43 million compared to $10 million in 2018 after charging $3 million to depreciation of plant and equipment from $5 million in 2018.
Net interest expenses declined to $0,27 million compared to $3 million in the prior year after all interests bearing debt was repaid during the year. Foreign currency translations resulted in exchange gains amounting to $5 million.
Net cash flows made from operations amounted to $10 million from $11 million in 2018.
Capital expenditure for the year, which was all financed through cash flows from operations totalled $4 million.
“Despite reduced electricity availability, fired production grew by 7 percent above the prior year. Improved plant availability material sourcing and production efficiencies resulted in relatively low production costs and good margins. Capacity utilisation averaged 76 percent the ensuing year will benefit from huge stock levels built up during the year and available production capacity,” said Willdale trading update.
Going forward the company said it was banking on the fruition of various Government and private sector projects which would drive its volumes.
It also said it is well stocked to meet product increase in demand. Opportunities exist in housing development, schools construction, and university expansion and government infrastructure. Economic stability would unlock potential in these and other prospects.
Online Reporter