Turnall expects to break even at F24 after bad start to year

HARARE – Turnall Holdings says that it will, at best, break even at the end of this financial year after its performance since the beginning of the year was affected by depressed demand for its products. Managing director John Mkushi told the AGM this morning that the year had started on a difficult note for the group, with demand at 60% of normal cycles.

“We did not post positive results since the beginning of the year.” However, Mkushi said there were signs that performance was slowly beginning to pick up. “And we are now preparing for a return to normal in the second half.”

In its first quarter trading update, sales volumes went up by 21% compared to the same period last year, largely driven by improved sales of concrete tiles. Revenue for the first quarter increased by 13% compared to the same quarter last year. But Mkushi said the group had to slow down production to manage cash flows as the macro-environment weighed on demand. This, he said, was due to a lack of agricultural activity because of the drought and the wait-and-see attitude adopted across the economy in anticipation of the delayed Monetary Policy Statement.

“The business suffered from severe cash flow constraints as a result. We incurred significant cost reductions to manage cash flows, and this resulted in us reducing our workforce significantly.”

Chairman Grenville Hampshire also noted that the start of the year had been difficult, but the group was preparing for the long term.

Mkushi said plans to install additional production capacity are on course, with commissioning set for the end of the year. The group is setting up a new sheeting plant at its Harare plant. The tile plant is being recapitalised with new additional templates, which will boost output from the current 25, 000 units per day to 40,000 units by the end of the 2024 financial year.

The Bulawayo sheeting machine is being converted to non-AC. Once the conversion is complete, the Bulawayo machine will focus on producing non-AC products, and the new Harare machine will focus on AC production. The civil works for the installation of the new Harare sheeting machine are in progress. The machine has a capacity of 210 tonnes per day, which is double the current output coming from Bulawayo.

“The significant portion of the company’s AC sales volumes come from Harare, and so the installation of the Harare plant is going to cut product transport costs from Bulawayo to Harare. This is going to lower costs and selling prices and improve operational efficiencies.”

The board decided to change the functional currency of the group to USD in response to the increased usage of this currency in the group’s underlying transactions, events and conditions.

At the AGM, director fees for the past year were approved at ZiG69 576 and auditor fees at ZiG91 842.-finx