HomeBusiness DigestNational Tyre Services’ profit grows by 72%

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Operating profit in the period increased to US$888 999, up from US$516 184 in the comparable period  in 2011. This was despite increasing pressure on overheads linked to electricity tariffs, distribution costs, wage increases as well as facilities and plant refurbishments.

Top line revenue grew by 41% to US$15,9 million, from US$11,3 million the previous year. The company said the increase in revenue was due to efficient supply chain management, a wider distribution footprint, increased brand awareness and visibility largely helped by differentiated services.

Earnings per share improved by 27% to US0,33 cents, up from US0,24 cents in the prior year. Improved profitability also stemmed from better cashflows from operating activities, which rose to US$575,479, up from a negative US$61,837 in the same period last year.

Volumes of new tyres in the Retail and Services  division increased by 17%, helped by the growth in contribution of high value truck and off road vehicle tyres. The company said it reopened two branches in Kwekwe and Chiredzi in April and December 2011, respectively, which both performed above budget.

Capacity utilisation at the Harare Truck Retreading factory was increased and resulted in the reopening of the Bulawayo factory in February 2012. The company said this was done to decongest the Harare factory and offer improved turnaround time to the Bulawayo market.

Outlining potential challenges in the outlook period, Company chairman Luis Ceneviz said the anticipated rise in rubber and oil prices, coupled with unreliable and costly energy supplies would  have a negative impact on prices and margins in 2012.

He, however, said management would work on the introduction of new products and services to cater for identified customer needs, whilst the distribution network was set to expand through the introduction of service centres in strategic and high traffic volume areas.

The company said it would continue with the volume growth business model, backed by differentiated services aiming to take advantage of the anticipated upward movement in the national vehicle fleet.

Ceneviz also believed the growth in distribution and transportation sectors offered opportunity for the group to grow revenues and improve market position.                                        

 

— Staff Writer.

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