By Prosper Ndlovu
BUILDING products manufacturer, Turnall Holdings Limited, is treading on the red zone after its losses for the first six months of 2014 increased 23 times compared to the same period last year.
The company’s unaudited financial results for the half year ended June 30, 2014 indicate a comprehensive loss of about 2,260 percent to $2,641,189 from $111,875 in June last year.
Gross profit stood at $872,425 by June 30 this year compared $4,172,272 in June last year and $10.5 million in December 2013.
Total assets value also dropped to $62.6 million from $70.1 million in the same period last year.
The results indicate the firm’s weak financial position when comparing total current assets value of $28.9 million to total current liabilities of $33 million.
Turnall board chairman Herbert Nkala admitted in a statement accompanying the financial results on Friday that all was not rosy in the company.
He said adverse economic factors weighed heavily on the firm, resulting in eroded demand amid liquidity problems and declining production volumes.
Erratic raw material supply mainly due to cash-flow constraints and low capacity utilisation at 45 percent, Nkala said, resulted in increased cost of production and reduced margins.
He said volumes of local building products performed four percent above budget while exports of non-asbestos cement products were 69 percent below budget.
Nkala also said the company’s business plans were affected by delays in a number of pipe projects that had been lined up by the government for both sewer and water reticulation due to funding constraints.
“The adverse factors mentioned above combined to produce a financial performance . . . that was below expectation.
“The company posted turnover of $12.9 million compared to $18.9 million in prior year with exports contributing three percent of that,” he said.
“An operating loss of $2,6 million was achieved mainly due to low capacity utilisation with fixed overheads being spread over a thin production level.”
Nkala said the company will continue focusing on working capital management to ensure the business survives the liquidity constraints in the market.
“Emphasis will continue to be placed on growing market share on the concrete tile product line capitalising on the superior quality and production efficiencies from the new plant.
“The remainder of the year should produce a profit that will see the first half year loss reduced,” he said.
During the first half of the year the company borrowed from different financial institutions to the tune of $7.6 million for working capital purposes.
The funding was also channelled towards the Newtec plant in Bulawayo while $1.2 million from African Banking Corporation Zimbabwe Limited was used in the installation of the concrete tile plant.
Turnall produces building and construction materials comprising corrugated sheeting, flat sheets, pantiles, pressure pipes, sewer pipes and related accessories.
Its operating subsidiary, Turnall Fibre Cement, has two main sub divisions – Turnall Building Products and Turnall Piping Products.
The firm supplies the low income housing sector market with building products, local authorities and municipalities for piping products.
It supplies mainly chrysotile fibre and cement raw materials, which are produced at its facilities in Bulawayo and Harare. Chronicle
