NTS skids on foreign currency shortages
Challenges in obtaining foreign currency saw National Tyre Services (NTS) report a drop in sales volume for the three months to December 2021, a company official has revealed.
According to the company’s third-quarter trading update released on Friday, volumes for the period declined by 29 percent against prior year as it struggled to land stocks on time for the festive season “due to challenges in obtaining adequate foreign currency.”
A total 8 931 tyres were sold during the third quarter to December 31, 2021 against 12 632 tyres sold prior year comparative.
Zimbabwean companies bid for foreign currency on the Reserve Bank of Zimbabwe (RBZ) managed auction system, but often do not get adequate supplies as the system uses a priority list and also awards successful bids on a pro-rata basis.
This means some foreign currency requirements by bidding companies are not met.
The Company’s operations were constrained by harsh economic climate given the negative effects of Covid-19 pandemic, surge in inflation and “inadequate foreign currency to imports tyres,” said Company secretary Stewart Mandimika.
To compound the situation, the Company also had to contend with power supply outages, which impacted production in its retreading factories, “negatively affecting standard customer turnaround time.”
Power supply in the country has been erratic owing to constant breakdown at Hwange thermal power station and power generation stoppages at Kariba Hydro Power Station to allow for dam wall repairs.
However, despite the challenges, retreading volumes and new tyre volumes recorded positive growth for the nine months to December 31, 2021 compared to the same period in the prior year.
New tyre volumes for the nine months to December 31, 2021 increased by 23 percent compared to same period last year which was significant progress under the difficult circumstances, said Mr Mandimika.
He added that retreading volumes grew by 2 percent year to date compared to the same period last year, as the company implemented marketing initiatives to support retreading customers during the quarter under review despite a challenging operating environment.
Commenting on the outlook, Mr Mandimika said key areas to watch, to ensure the continued viability of the business, will be cost control, an uninterrupted supply chain and avoidance of loss of capital against inflationary pressures.
“It is hoped that the foreign currency auction platform will grow further to cater for the industry’s needs,” said Mr Mandimika.-The Herald
