BUSINESS REPORTER
Zimbabwe Stock Exchange listed building and roofing materials manufacturer, Turnall Holdings Limited, is planning to acquire a new fibre cement sheeting plant for Harare, Business Times can report.
The major capital undertaking was revealed by board chairman, Grenville Hampshire.
In addition, Hampshire said the company will also modernise its sheeting machinery in Bulawayo and that it also intends to establish a presence in the glass reinforced plastic (GRP) pipe manufacturing market in Zimbabwe.
The move, according to Hampshire, is expected to improve product offering , increase production capacity and production efficiencies, among many other benefits.
“The focus now is on delivering on re-capitalising the plants with the main projects being to purchase a new fibre cement sheeting plant for Harare, upgrading key elements of the Bulawayo sheeting machine and in establishing a presence in the GRP market leading to the installation of a glass reinforced plastic (GRP) pipe manufacturing facility in Zimbabwe. The anticipated benefits will include improved product offering, increased production capacities and efficiencies, better quality products, increased uptake from customers and the resumption of export sales,” Hampshire said.
In its financial results for the six months to June 30, 2023, Turnall, reported a 308% profit increase to ZWL$10.62bn from ZWL$2.605bn reported in the prior comparative period.
This was attributed to the implementation of a major restructuring and recovery plan.
According to Hampshire, the plan assisted the business in overcoming a number of challenges like market liquidity constraints and disruptions in the raw material supply.
Turnover for the group stood at ZWL$18bn in the period under review compared to ZWL$12.7bn reported in the same period in the previous year, reflecting a 41% growth despite 6% reduction in sales volumes.
“The sales performance was mainly driven by a deliberate move to focus on the high value but low tonnage products,” Hampshire said
Hampshire said business performance was also affected by stock outs owing to shortages of key raw materials which are normally imported from Russia.
“The supply challenges were due to war between Russia and Ukraine and the subsequent sanctions imposed on Russia. The company has since secured alternative sources for fibre and normal supplies are expected in the third quarter of 2023,” he said.
Due to the sharp rise in exchange rates during the first half of the year, the company incurred an exchange loss of ZWL$14.7bn , which had a detrimental effect on the group’s performance.
Also, exchange losses of ZWL$8.8bn arose from outstanding terminal benefits for former employees.
Gross margin for the group was 23% compared to 51% achieved in the same period last year.
The official and alternative market exchange rate discrepancies put pressure on margins because they had an adverse effect on cost of doing business and could not be sustainably offset by changes in selling adjustments.
Consequently, the cost of doing business went up by 122%.
The group started a massive expansion drive as a result of receiving an advance of ZWL$17bn from the rights offer, which was used to fund capital projects that are already under way. This will help the group increase revenue and profitability in the future.
