HomeBusiness DigestWilldale seeks US$4 million

Brown vs Woods: The verdict is in

The group hopes the injection will improve capacity utilisation to 50% from 30%.

Munginga told shareholders in the capital last week the company’s performance has been constrained since the introduction of the multi-currency system.

He said the group remained in a loss position at half-year despite an increase in production. Production increased more than 50% in the first half, with revenues up 153% but this was however eaten up by operating costs that grew 60%.

He also said competition was stiff in the brick-making industry, adding Willdale had failed to keep up with its rivals.

Zimbabwe’s construction sector is forecast to record strong growth in the medium term, with real growth estimated at an average 8% per year between 2012 and 2016. This is significantly in contrast to a prolonged period of mostly negative growth up until 2008. 

Willdale failed to take advantage of the developments, owing to undercapitalisation and a tremendous overheads burden, Munginga said.

In the year to September, the group reported an operating loss of US$1,222 million despite a 144% revenue growth. 

Given that mortgage finance availability has improved since dollarisation and there has been steady private and public capital flow towards housing development, analysts forecast a 60% growth in revenues to US$5,924 million this year should the funds be available.

Willdale management previously highlighted that the key constraints to growth in profitability lay in acquiring affordable and adequate lines of credit and suppressing overhead growth.

The focus towards brick volumes and quality had a positive effect on revenues albeit they would still remain in the negative, with gross margins of -0,05% for 2012. EBITDA margins are expected to remain slightly in the negative at the same time growing at 40%, management said.— Staff Writer.

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