TINASHE MAKICHI
Listed roofing and piping products manufacturer, Turnall Holdings has grown its appetite for exports into the region even at a loss as foreign currency shortages bedevilling the economy continue to bite.
Turnall Holdings chief executive Roseline Chisveto told Business Times that export initiatives remain part of the company’s strategies mainly emanating from the need for the company to generate foreign currency which is required in its production processes.
Through exports, the tile manufacturer also stands to benefit from the Reserve Bank of Zimbabwe export incentive which will go a long way in off-setting some of the company’s costs.
Turnall’s import component for its raw materials is currently at 15% while its exports make up 1% of the company’s total production.
“Exporting remains a priority for the company at the moment but there are still challenges considering that the profit margins are slim. We are finding it difficult from a pricing point of view because of the high cost of manufacturing in Zimbabwe and secondly the regional currencies continue to depreciate against the invoicing currency, the United States dollar,” Chisveto said.
Zimbabwe is battling a foreign currency crisis which has seen some local companies struggling to import key raw materials. The central bank is pushing for an export-led growth and has dangled an incentive to boost exports.
Turnall recorded an increase in turnover of $13,5 million for the six months of 2018 compared to $7,7 million in the comparative period. Gross profit margin increased to 39% compared to 27% in prior year attributed to a significant improvement in capacity utilisation, consistent raw material and spares supply, procurement efficiencies and cost control.
During the last six months, Turnall started receiving fibre from the local Shabani Mashava Mines and has since conducted successful trials.
The company commenced with 10 percent local fibre and increased to 50 percent usage against imported fibre. The revival of SMM according to the listed firm will play a massive role in minimising the company’s import bill on raw materials. Operating expenses were 20 percent down from 23 percent due to cost control measures and improved revenue base. Production volumes for the company for the period were 29 630 tonnes, which is an increase of 79 percent from the previous comparable period.
