Turnall’s Q1 profit up 21%

By Natasha Chamba

Listed roofing and building products manufacturer, Turnall Holdings Limited, defied the challenging macro-economic climate to post a 21 percent jump in profit to $8,5 million in the first quarter ended 31 March 2019 from US$7 million recorded during the same period in 2018.

The company has consolidated a profitability path after it reversed years of a loss making position.

Turnall group managing director, Ms Rose Chisveto, attributed growth in profits to a combination of factors such as improved cash flow and trading on the local market.

“The group is trading profitably compared to the same period last year. The company’s cash flow has improved significantly for the first quarter compared to the same period last year. The cash generated was reinvested in working capital and we have seen some gains during the first quarter,” she said in a commentary accompanying the financial report for the period.

“Export sales contributed 0.13 percent compared to the previous year’s 0.51 percent and this is attributed to non-competitive pricing in the region.”

Ms Chisveto said Turnall generated US$600 000 for first quarter from exports sales and that the funds were used to import critical raw materials and spares.

“Despite a 40 and 30 percent drop in sales volumes and production output respectively, gross profit margin for the quarter was 46 percent compared to last year’s 39 percent,” she said.

However, the company said it still faced macro-economic challenges such as liquidity constraints, subdued aggregate demand, uncompetitive pricing as a result of the previous fixed exchange rate between the US dollar and bond notes.

As part of its sustainability reforms, Turnall is planning to undertake a raft of cost containment measures coupled with projects expansion to improve output.

“Cost containment and business rightsizing will remain a top priority to ensure profitability. Plans are underway to upgrade a non-asbestos plant in Bulawayo in order to improve production efficiency and reduce production costs,” said Ms Chisveto.

“As in March mining levels were 364 employees and mostly we have skewed towards contract employees, only 165 employees are permanent employees.”

Meanwhile, the company has increased capacity utilisation for its factories in Bulawayo and Harare.

Factory upgrades started last year with the roofing concern announcing that it would conduct upgrades at a cost of $300 000. At the time the Bulawayo plant was operating at 63 percent while the Harare plant was at 48 percent. The Chronicle