HomeBusiness DigestProductivity holds up as NTS fights retreads

Productivity holds up as NTS fights retreads

Ngoni Chanakira

NATIONAL Tyre Services (NTS), whose turnover stood at $8,8 billion, says overall volumes of new tyres have declined by 10% mainly due to supply constraints.

e=”Verdana, Arial, Helvetica, sans-serif”>The company says the market’s ability to meet the ever-increasing cost of tyres is expected to further impact on volumes, particularly in the privately- owned vehicle sector.

NTS is battling stiff competition from several indigenous players who have entered the market with retread tyres.

The company is led by Donal McDevitte, who doubles up as managing director of Dunlop Zimbabwe Ltd, the country’s sole tyre manufacturing entity.

NTS said an increased emphasis on the truck tyre market with its tie in to retreading, saw volumes increase by 16%.

It said the passenger and light truck tyres had also declined due to the negative effect of the crippling fuel shortage caused by lack of foreign currency for imports.

NTS is also facing various problems caused by the decline in agriculture due to the controversial fast track land resettlement programme introduced three years ago.

The company said agriculture and mining had declined with the ongoing constraints in these sectors tremendously affecting business.

For the six months period ended June 30 NTS’ historical turnover of $8,8 billion was attained through continued commitment to stock availability backed by improved tyre management systems, service and retread quality.

The company said the control of costs contributed to profit before tax of $2,8 billion.

“Despite the economic hardships productivity has not been compromised and employee relations in all sectors of the company receive ongoing attention,” NTS said.

“The change in trading terms to cash on order by the majority of our suppliers, and the difficulty in accessing productive sector loans in the second quarter, saw interest charges increasing substantially. However borrowings, in real terms, have been well contained.”

The company said it was currently reviewing its network, the affordability of acquiring new technology for the relug section, and the continued upgrade of the retread factories to meet market expectations.

“The market’s ability to meet the ever increasing cost of tyres was expected to impact on volumes, particularly in the privately-owned vehicle sector,” NTS said.

“This will be offset by improved procurement (margins) and wholesaling opportunities (volume).”

The company said the unpredictable character of the current economic climate rendered future forecasts difficult.

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