Willdale leverages existing assets to raise capital

Brickmaker, Willdale Limited, says it is exploring various options to enhance plant capacity in the short term, leveraging on its existing assets to source appropriate funding.

The company recently said it is still negotiating for the disposal of certain idle assets to raise funds for capital expenditures.

In a statement of financials for the year ended September 30, 2023, Group chairman, Mr Cleopas Makoni, said efforts to raise funds from existing assets to upgrade production facilities will be enhanced in the new year.

In 2017, the company disposed of part of its land for U$11 million, with the proceeds utilized towards servicing debt and settling preference share obligations.

Commenting on operations, Mr Makoni said throughput and efficiencies for the period under review were affected by intermittent power outages that prevailed throughout the financial year.

This is at a time demand for bricks was relatively high throughout the year under review, driven by housing development, construction of educational facilities and shopping centres.

However, clay crushing capacity was enhanced during the year by investing in a new plant, resulting in better product quality.

At the same time capacity utilisation averaged 75 percent, driven by demand from housing development and other construction activities.

“Volumes were, however, 5 percent below the prior year, largely due to supply-side challenges caused by electricity shortages,” Mr Makoni said.

However, a program is under implementation to ensure consistent brick supplies during the rainy season to satisfy growing demand, Mr Makoni said.

He noted that the push towards higher-margin brick types continued to drive margins up, and the brand remained dominant in the market despite increasing competition.

Going forward, the company noted that key economic fundamentals have remained stable, laying a good foundation for a better operating environment in the ensuing year.

“We will leverage the prevailing boom in the construction of houses, commercial buildings, educational facilities, and other infrastructure to improve revenues and profitability in the ensuing year,” said the company.

In terms of financial performance, inflation-adjusted revenue for the year totalled $37 billion, 106 percent above the prior year’s $18 billion.

However, distortions in exchange rates continued to impact the revenue figure, with exchange losses amounting to 21 percent of revenue, reflecting the extent of exchange rate movements on foreign currency-denominated balances.

“Margins were however sustained by a favourable product mix, which kept average prices at acceptable levels,” said Mr Makoni.-herald.cl.zw