Willdale brick sales up despite VAT hike, company seeks stable production

Brick maker Willdale says the introduction of 15 percent value added tax (VAT) on clay brick sales from January 2024 brought with it some shocks into the market as customers resisted the increased prices.

Group chairman Cleopas Makoni in a statement of financials for the half year to March 31, 2024 said customers preferred to buy from cheaper suppliers who were allegedly not complying with the VAT requirements, presenting unfair competition in the market.

“It is hoped that mechanisms will be put in place to ensure that all manufacturers comply with the VAT requirements going forward,” he said.

However, the company still managed to sale more bricks.

During the half year period under review, sales volumes were 3 percent up compared to the prior year despite challenges in the market.

Company revenue in inflation adjusted terms grew by 91 percent compared to the same period in the prior year. In historical cost terms revenue grew by 1 272 percent.

The company recorded an operating loss of $113 billion for the period compared to $19 billion in 2023.

“Profitability was affected by exchange rates and indices used to compute revenue and expenses and unrealised exchange losses emanating from the revaluation of foreign currency denominated liabilitites,” Makoni said.

In terms of operations he said the poor rainy season presented an opportunity to restart extrusion earlier than usual resulting in a 145 percent increase in green production compared to the prior year.

Makoni said production will continue to be ramped up subject to the availability of electricity and working capital to meet growing demand.

“Efforts are underway to secure funding to acquire the planned all-weather plant,” Makoni said.

He noted that opportunities to increase sales in the remainder of the year exist as stakeholders in the construction sector continue to promote various projects in housing development and other infrastructure.

Makoni indicated that efficient and low-cost production will be critical going forward to compete effectively.

“We will continue to review our operating strategy to ensure growth in both revenue and profitability, riding on our strong brand and systems that deliver quality bricks,” he said.

Makoni also highlighted that company partners in the land development transactions have commenced making applications for relevant permits to start the projects.

He said the projects are expected to contribute to financial results in the next financial year.-ebusinessweekly