Listed tile manufacturer Turnall Holdings has set its sights on increasing exports to South Africa by around 300 tonnes per month as it seeks to replenish its foreign currency stocks.
The company is currently exporting around 100 tonnes to South Africa but due to biting foreign currency shortages in Zimbabwe, the firm is now fully focused on servicing the South African and Mozambican markets.
Turnall Holdings finance director Samson Mavende told Business Times that the focus on exports is driven by the company’s appetite for foreign currency required to import critical raw materials.
“We expect to sell about 300 tonnes per month, worth about US$250,000.
We started last month and exported products worth almost US$100,000,” Mavende said.
“The group is now focused on the regional market and expects to export to South Africa and Mozambique in order to generate foreign currency. The group expects exports to increase significantly compared to the previous year.”
In the first half of 2019, Turnall experienced depressed product demand due to low disposable incomes, economic hardships and inflation.
According to Turnall, the group had adequate supply of products available for sale in the market and took the opportunity to build up inventories in advance of the peak sales period in the second half.
But towards the end of the second quarter, the group began exporting to Mozambique after experiencing significant demand for roofing products.
The group’s turnover for the half year increased to ZWL$25m compared to ZWL$13.5m in the prior comparable period, while profit from operations of ZWL$6.8m was recorded from the previous comparable period’s profit of ZWL$2.5m.
Finance costs declined to ZWL$300,000 from ZWL$400 000 due to the impact of favourable debt restructuring. Profit before tax was ZWL$6.5m compared to ZWL$2.1m in the previous comparable period.
The income tax credit to the income statement arose from the unwinding of deferred tax asset balances. Turnall noted that it did not pay any current taxes, as it utilised the assessed tax losses generated in previous years.
The net current asset position at the end of the period improved to ZWL$5.7m from ZWL$2.2m as at 31 December 2018.
The group’s interest cover was 23.1 times compared to 6.8 times in the same period last year. Net borrowings were 41% of shareholders’ funds compared to 80% at year’s end.
Turnall’s cash generated from operating activities was ZWL$2m compared to ZWL$0.6m in the previous comparable period.
In the outlook, the company expects marginal growth of volumes in the second half, relative to the first half, as this is the peak period for roofing projects.
“There is evidence that long overdue work on the rehabilitation of water and sewage infrastructure is now taking place and the group has maintained its pipe-making capacity in order to satisfy demand from this sector,” Turnall said.