CONSTRUCTION firm, Turnall Holdings Limited (THL) says the prevailing liquidity challenges and low aggregate demand in the economy hampered the group’s efforts to realise its full potential in the half year ended June 30, 2023.
During the period under review, fiscal and monetary authorities initiated several measures to stop the Zimbabwe dollar from rapidly depreciating.
Among these initiatives were measures that limited Zimbabwe dollar liquidity which had been identified as the main cause of the local currency’s accelerated depreciation.
However, what it meant for the market was reduced access to cash, thereby lowering demand for products.
“The group’s turnover for the half year was ZWL$18 billion in inflation-adjusted terms compared to ZWL$12,7 billion in the previous year same period, representing a 41% growth despite a 6% reduction in sales volumes. In historical terms, revenue was ZWL$11,4 billion which was a 547% growth from last year,” THL chairman Grenville Hampshire said in a statement attached to the firm’s financial report for the half year ended June 30, 2023.
“The sales performance was mainly driven by a deliberate move to focus on the high value but low tonnage products. However, the liquidity challenges and low aggregate demand prevailing in the economy hampered the group’s efforts to realise its full potential.”
Turnall’s performance was also affected by stock outs owing to shortages of key raw materials which are normally obtained from Russia.
“The supply challenges were due to the 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,” Hampshire explained.
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The liquidity challenges and resultant low aggregate demand affected the firm as it went through a major restructuring and recovery plan in the first quarter of 2023.
“The first key element of the restructuring which is focused on Turnall’s core business of roof sheeting was to take action to address quality issues and manufacturing efficiency at the Bulawayo plant and to begin a large investment to reinstate manufacturing at the Harare factory, providing the much needed capacity and critical mass,” Hampshire said.
“This additional capacity will come on stream in the third quarter of 2024. Disruption to the supply of asbestos fibre caused by the war in Ukraine has had a major impact on the business, but from September 2023 onwards, alternative arrangements will come on stream.”
THL reported lead times of over nine months for key equipment required to address quality and production problems added to the headwinds experienced during the first half of the year.
However, these headwinds are expected to abate this quarter.
In terms of liquidity, THL recorded ZWL$2,16 to every dollar of debt, showing the firm was able to meet its capital needs.
On profit after tax, the firm saw a growth of nearly 308% to ZWL$10,62 billion in the period under review from the comparative 2022 period.
This profit was driven by a near ZWL$28 billion gain in THL’s net monetary position.
THL is currently focused on “re-capitalisation initiatives, continued cost containment initiatives, enhancement of production efficiencies and the improved product offering” for the group’s improved material performance.
