Willdale records 26pc jump in sales volumes
Zimbabwe Stock Exchange (ZSE) listed brick-making firm Willdale Limited says sales volumes for the quarter to June 30, 2023 increased by 26 percent over the same period last year, thanks to increased construction activity during the period.
During the quarter, the construction industry picked up from the rainy season shutdown period, resultantly pushing volumes higher.
Housing development for both cluster homes and individual units is expected to continue to push sales, with significant contributions expected to come from improvements in educational facilities.
Year-to-date volumes for the nine months were, however, for percent below the prior year and still reeling from the effects of low production experienced earlier in the year due to electricity shortages that have persisted since 2022.
The brick-making firm indicated sales volumes for the half year to March 31, 2023 went down 16 percent on the back of low stock availability resulting from electricity shortages that impacted production, while demand remained strong.
Electricity supplies however later improved in the quarter boosting efficiencies and production levels.
For the quarter under review, the operating environment remained challenging for businesses and Willdale was not spared.
“The instability in the exchange and inflation rates presented a challenging operating environment characterised by low aggregate demand and high operating costs,” said company secretary Mavuto Munginga in a trading update for the period under review.
Despite the challenging environment, Willdale maintained a significant order book built to drive sales for the remainder of the year.
“The company continues to pursue various opportunities requiring bricks in various sectors,” said Mr Munginga.
In terms of financial performance, year-to-date revenue grew by 83 percent to $20 billion in inflation-adjusted terms and by 704 percent to $10 billion in historical terms compared to the prior year. Revenue continued to be impacted by exchange rate distortions.
According to Mr Munginga, the continued growth in demand for higher-margin brick types has helped to improve the product mix and margins.
Focus remains on efficient production and cost containment given the prevailing economic environment. While the operating environment remains challenging for businesses, Willdale is upbeat about performance as monetary authorities try their best to stabilise the economy. Short-term business plans will continue to be reviewed to remain viable. Mr Munginga said appropriate strategies will be deployed to generate sufficient business given the low aggregate demand.
“Statutory Instrument 134A of 2023 was issued on 25 July 2023 significantly resolving the impasse with Zimra on the issue of Value Added Tax on bricks. Clay bricks were classified as exempt from VAT with effect from 01 August 2022.
“This classification, however, implies that the VAT portion on purchases will no longer be claimable as input tax and will therefore increase costs of operations.
“This unfortunately will also increase the cost of construction,” said Mr Munginga.
He added the company will continue to leverage its brand, superior quality, and capacity to dominate the market and sustain margins, subject to a sufficient supply of electricity.
-herald
