PROFIT after tax at the Zimbabwe Stock Exchange listed roofing materials producer, Turnall Holdings Limited increased by 308% to ZW$10,6 billion during the year ended June 30, 2023 after revenue increased.

The firm reported ZW$2,6 billion in profit after tax during the same period in 2022.

In a statement released last week, Turnall said the group’s inflation adjusted turnover increased to ZW$18 billion during the review period, representing a 41% rise from ZW$12,7 billion during the comparable period in 2022.

However, sales volumes dropped by 6%, after management took a strategic decision to focus on the high value, 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,” the firm said.

“Business 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,” Turnall noted.

It said inflation-adjusted gross margin for the year under review was at 23%.

This figure was 51% during the same period last year.

Turnall said margins were under pressure as a result of exchange rate disparities in Zimbabwe, where the black market has been flourishing due to foreign currency shortages on the official markets.

“Consequently, the cost of goods sold went up by 122%, whilst revenue grew by 41%. The gross margin in historical terms, however, was 60% compared to 58% reported in the same period last year,” it said.

“The inflation adjusted operating expenses to sales ratio was 55% compared to 28% in the same period last year and in historical terms was 42%, compared to 27% recorded in the same period last year.

“Despite the challenges experienced in the first half of 2023, the board and management are confident that the recovery is on track and with the improved fibre supply in the second half of the year, re-capitalisation initiatives, continued cost containment initiatives, enhancement of production efficiencies and the improved product offering, the group is geared for material improvements in its performance,” the group said in the statement.

The Zimbabwe dollar traded at US$1:ZW$5 739,79 on June 30 2023 and US$1:ZW$370,96 on June 30 2022.