General Beltings (GBH) reported a 28 percent slump in sales volumes in the first five months of the year as disposable income in the market dwindles, coupled with power outages that have seen industry fail to operate at capacity.
Despite volumes slowing down by almost 30 percent, revenues went up 116 percent reflecting forex induced inflation that saw prices going up by as much as six times on the formal market and more than ten times on the parallel market in line with prevailing interbank and parallel market rates.
MD Wilbroad Tsuroh told the company’s annual general meeting yesterday US dollar revenue went down 23 percent in the period under review.
At Cernol, volumes went down 8 percent and revenue 105 percent up with US dollar revenues falling by 6 percent.
Tsuroh said overall total volumes went down 13,7 percent from 365t to 310 and total revenue up 110 percent.
He said margins are in line with budgets year to date.
Tsuroh said value proposition targets and import parity was being achieved with support from key customers having been critical especially in the mining sector for conveyer belts.
“GBH has a technical partnership, for short term financing, with NUVO which allows GBH shorter order turnarounds,” he said.
About the same time prior year, GBH forecast growth for its business buoyed by demand for its products from the mining sector.
At the time, new equipment had been delivered and commissioned resulting in manufacturing efficiencies. The equipment at the company’s plant replaced old components after auditors noted losses from antiquated equipment.
In the financial year for the period to December 2018, GBH reported turnover of US$4,743 million which was in line with prior year’s US$4,756 million with both divisions complementing each other.
Throughout the year, GBH said in its annual report, the company defended its market position through delivering a commensurate value proposition to its customers underpinned by improved operational efficiencies.
Gross profit at US$1,368 million was a 3 percent improvement on the prior year’s US$1,325 million due to improved throughput in the chemicals division and a favourable product mix at the rubber division.
“Operating expenses at US$ 1,725 million were 3 percent above prior year’s US$1,656 million despite inflationary pressure on expenses and partial reinstatement of salary cuts in the last quarter of the year,” the company said.
As a result an operating loss of US$323 000 was recorded against a prior year operating profit of US$6 000.
Finance costs at US$243 000 were 24 percent higher than the prior year’s cost of US$195 000 due to interest charges on legacy debt while average finance cost was at 12 percent per annum.