TURNALL Holdings Ltd (Turnall) says demand for its products during the first quarter of this year has been less than 50% of normal due to the country’s poor macroeconomic fundamentals.
Turnover has however increased by 8% in inflation-adjusted terms to $83,2 billion.
Operating profits at $7,7 billion represented 9% of turnover.
Attributable profits of $5,6 billion were achieved, after charging a monetary loss of $11,7 billion and crediting net finance income of $19,2 billion.
Turnall chairman Hillary Munyati last week said there were strong signs that there would be a strong recovery in demand from the second quarter of 2004.
Turnall is a major player in the construction industry, supplying various products including asbestos sheets and roofing materials to the market.
“Customers have effectively destocked and are now placing normal orders,” Munyati said. “Export volumes are also showing an improvement. Turnall has been able to access the Reserve Bank of Zimbabwe’s Productive Sector Funding Facility. This will enable the company to reduce the interest burden and pass on the benefits to customers.”
In his audited statement accompanying the firm’s results for the six month period ended December 31 Munyati said the local operating environment was characterised by hyperinflation peaking at 598% in December due to a shortage of foreign currency and an unprecedented increase in interest rates towards the end of the year.
The basic inflation-adjusted earnings per share achieved were 1 230 cents. The board has however decided not to declare a dividend because of the current “liquidity crunch and the level of uncertainty and lack of predictability of the future”.
Munyati said this year had begun with the supply chain being caught up in interest rates soaring to levels of 900% since December 2003.
“The market immediately contracted as money flows dried up,” Munyati said.
“This led to many debtors defaulting and supplies to most customers being suspended. Demand for Turnall Holdings Ltd products in the first quarter of 2004 has been less than 50% of normal.”
The chairman said overall company volumes declined by 7,5% last year.
Government effected a price freeze on a wide range of products including the own manufactured products from the beginning of the year up to May 2003. As a result there were no price increases in the first five months as Turnall’s own manufactured roofing products were under a price freeze.
Munyati said operational costs moved in line with inflation.
“Significant increases in cement costs were incurred following the relaxation of price controls during the second half of the period under review,” he said. “Turnall has continued to invest in state-of-the art manufacturing systems to maintain world-class manufacturing. People development at management and shop floor has ensured a focussed commitment to quality and efficiency.”
Turnall was accredited with the ISO 18 000:1999 Health and Safety Standard in December 2003.