Zimbabwe Stock Exchange-listed roofing and building materials manufacturer,Turnall Holdings, has set up procurement structure that will ensure uninterrupted supply of critical raw materials.
The company’s board chairman, Bothwell Nyajeka, said the strategy will help the company to obtain raw materials even during lockdown periods.
The approach, Nyajeka said, would improve the company’s performance in the near future.
“The first quarter coincided with the onset of another lockdown as the country fights the effects of the coronavirus pandemic,” Nyajeka said.
He added: “The measures instituted, disrupted the supply chain, route to market access and trading hours and the economy remained depressed owing to constrained demand and liquidity challenges.
“The group has put in necessary procurement structures to ensure a continuous supply of critical raw materials that will translate to uninterrupted production for the coming quarter.”
In the quarter to March 31, 2021, Turnall’s sales volumes marginally increased by 1% despite the hard lockdown during the reviewed period.
Building products, concrete and AC pipes contributed 51%, 48% and 1% of the volumes, respectively.
Building products have declined by 21% compared to last year during the same period while concrete products increased by 43% for the period under review.
Nyajeka said capacity utilisation for Turnall improved to 60% during the period under review from 57% reported in the prior comparative period regardless of the effects of covid-19.
Turnall’s exports, however, slowed, largely due to regional lockdowns and consequent logistics disruptions.
Consequently, the group is focusing on satisfying local demand and will resume exports once the situation improves in the regional market.
Nyajeka said electricity, fuel and labour costs also remained high and were significant cost drivers over the period.
Turnall said it looks forward to the roll out of vaccination programs to give hope of a turnaround in the pandemic and improve overall economic performance, driven by the good agricultural season, continued stability in the exchange rate, stable inflation and improvement in the efficiency of the supply chain.
Nyajeka has projected a better second quarter performance , anchored on a continued volume growth trajectory and cost containment.
Volumes are expected to grow further in the third and fourth quarter on the back of production efficiencies, aggressive sales strategy leveraging on a re-modelled route to market.
Nyajeka said the business has adequate strategies in place to sustain continuity in the foreseeable future and protect value in an operating environment that is improving and stabilising but challenging.
The National Social Security Authority, which is the largest shareholder in Turnall with 32.5% shareholding , wants to dispose of its entire shareholding in the business as part of its investment consolidation strategy.