Willdale banks on construction boom
BRICK manufacturer Willdale Limited has said it will capitalise on the construction boom on the market to grow its revenue base.
This comes as government and the private sector have committed huge budgets to construction of houses, commercial buildings, educational facilities and road infrastructure.
In a statement accompanying the financial results for the period ended September 30, 2023, Willdale board chairperson Cleophas Makoni said the relative stability seen in the last half of 2023 ensured a better operating environment.
“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. Efforts to raise funds from existing assets to upgrade production facilities will be enhanced in the new year,” Makoni said.
“However, electricity supply must improve in order to boost capacity utilisation and efficiencies and put more bricks onto the market.”
Willdale’s plans to leverage the construction boom comes as its market capitalisation climbed by 2 245%, year to date, to ZWL$75,04 billion.
At a price of ZWL$1,80 as of December 29, 2022, Willdale’s total listed shares of 1 778 001 428 were valued at ZWL$3,2 billion.
However, as of 2023’s last day of trading this past Friday, Willdale’s market capitalisation had grown to ZWL$75,04 billion as investors became optimistic and took positions following a government and private sector-led construction boom.
During its financial year, throughput and efficiencies in the production of bricks were affected by intermittent power outages that prevailed throughout the financial year.
“Clay crushing capacity was enhanced during the year by investing in a new plant resulting in better product quality. Capacity utilisation averaged 75% despite electricity supply deficits,” Makoni said.
“The board is exploring various options to enhance plant capacity in the short term and intends to leverage on its existing assets to source appropriate funding. A programme is under implementation to ensure consistent brick supplies during the rainy season to satisfy growing demand.”
Lower availability of stock due to electricity shortages, contributed to a 5% decline in sales volumes compared to the prior year.
Makoni said margins were, however, sustained by a favourable product mix which kept average prices at acceptable levels.
For the stated period, revenue for the year totalled nearly ZWL$37 billion which was 106% above the prior comparative period’s ZWL$17,95 billion.
“Distortions in exchange rates continued to impact the revenue figure. Exchange losses amounted to 21% of revenue (2022: 2%) reflecting the extent of exchange rate movements on foreign currency-denominated balances,” Makoni said.
Profit after tax grew by nearly 38% to ZWL$8,3 billion in the stated financial year, from a 2022 comparative of ZWL$6,03 billion.
Selling and distribution as well as administrative expenses totalled ZWL$10,39 billion during the stated period, up 130,44% from the 2022 comparative.
This also weighed down on Willdale’s profitability.
However, the firm was left with ZWL$1,44 to every dollar of short-term debt leaving it liquid enough to fund its 2024 activities.
This was owing to increases in its trade and other receivables as well as inventories that both had more than doubled from the 2022 comparative.
Total assets more than doubled during the stated period to ZWL$143,19 billion, from the 2022 comparative.
“Investment property, land and buildings were revalued at the end of the financial year to reflect fair values in line with accounting policy,” Makoni said.-newsday
