NTS optimistic about future prospects
Management at Zimbabwe Stock Exchange listed tyres supplier, National Tyre Services Limited (NTS) remains upbeat about the firm’s future prospects on the back of various measures being implemented by the Government to stabilise the economy and restore confidence.
The Government recently introduced a host of measures intended to restore macroeconomic stability, boost confidence in the economy, increase the appeal of the local currency, preserve value for depositors and investors and deal with market indiscipline.
The measures included a temporary suspension of lending, further reduction of the quarterly reserve money growth target to 0 percent as well as an upward review of the capital gains tax for short term investments on the stock exchange from an initial 2 percent to 4 percent.
The Monetary Policy Committee (MPC) resolved to put in place measures intended to
align interest rates with the inflation developments, enhance circulation of foreign
exchange and introduce an investment instrument to assist holders to store value in gold
coins.
These include increasing the bank policy rate from 80 percent to 200 percent per annum
and increasing the Medium Term Accommodation interest rate from 50 percent to 100
percent.
The Zimbabwe dollar minimum deposit rates were also increased from 12,5 percent to 40
percent for savings deposits and from 25 percent to 80 percent for time deposits.
“There is optimism that measures being implemented by the Government will stabilize
local currency and build market confidence going forward,” said NTS.
However, for the first quarter to June 30, 2022, NTS faced a tough time with overall new
tyre sales volume declining by 26 percent compared to same period last year due to
foreign currency inadequacies affecting importation of tyres from China and India.
The country has been battling economic challenges stemming from among others limited
foreign currency availability and exchange rate volatility. As a result, the annual rate of
inflation surged to 256,9 percent for July 2022 from 191,6 percent.
Month-on-month, inflation rate in July 2022 was 25,6 percent, shedding 5,1 percentage
points on the June rate of 30,7 percent according to figures from the Zimbabwe National
Statistics Agency (ZIMSTAT).
The economy has also been affected by the global tensions in Eastern Europe which have
caused a general spike in prices of goods and services and disrupted supply chains across
markets. These have weighed down on businesses across sectors.
“Rising prices of goods and services, agricultural inputs, and basic commodities are
negatively impacting business operations, as disposable income is eroded.
“National Tyre Services recorded growth in premium new tyres and retreading volumes
during the period under review, premised on availability of market driven products,”
said NTS in a trading update.
According to NTS, re-treading volumes increased by 6 percent when compared to the
same period last year, as the company continues to offer value-added services to support
re-treading customers.
Sales volumes for premium tyres grew by 36 percent during the period under review
when compared to the same quarter in the prior year.
The firm is also implementing effective strategies to serve the premium tyre market
segment.
Tubes fell 74 percent to 484 for the quarter while volumes for accessories came down by
25 percent to 7 156 compared to 9660 recorded during the same period in the prior year.
Services volumes for the quarter under review decreased by 18 percent compared to the
same period last year, as power outages affected branch operations during the period
under review.
Several other listed businesses such as Star Africa and ART have also bemoaned power
outages which have resulted in reduced production volumes for the quarter to June 30,
2022.-The Herald
