Willdale issues further cautionary statement on idle assets

Zimbabwe Stock Exchange listed brick maker, Willdale, has issued a further cautionary statement advising shareholders that the firm wants to dispose of certain idle assets.

“Further to a Cautionary Statement published on August 3, 2022, the directors would like to advise shareholders and the general public that negotiations for the disposal of certain idle assets, whose outcome could have a material effect on the business and the share price, are still in progress,” the statement reads.

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

Over the years, Willdale has been focusing on the production side, buying new equipment and upgrading laboratories.

The company budgeted about US$1 million in capital expenditure to refurbish and renew parts of fixed and mobile plants. This was part of its efforts to enhance efficiency and quality.

“Plant capacity utilisation, which is currently averaging above 80 percent, should provide sufficient stocks to meet targeted sales volumes for the ensuing quarter, provided electricity supply remains reasonable,” the company said in its third quarter ending June 30, 2022.

Unfortunately, sales volumes for the 9-month period declined by 9 percent compared to the same period in the prior year.

“The decline in sales is attributed to lack of stock which was caused by effects of the late April rains,” it said.

The company confirmed that production is currently ahead of target and prior year, which should provide enough stock to cover the sales gap in the fourth quarter.

“Demand remains high, driven by cluster home developments and individual home builders,” Willdale said.

Cumulative revenue declined by 1 percent in hyperinflation terms compared to the prior year but was 91 percent above the prior year in historical terms.

“Although average prices have been affected by exchange rate disparities, product mix remains favourable and this is expected to buttress margins for the full year,” reads the trading update.

It said the recent tightening of lending terms and conditions by the central bank presents challenges in raising working capital. “However, the business model in place is generating sufficient working capital to support the business in the short term.”-ebusinessweekly