PG subsidiary Zimtile expects exports to comprise 25% of its volumes by end of 2013, driven by high demand of tiles in foreign markets, a development that has raised hopes the local construction industry may be recovering.
In an interview with businessdigest, Zimtile managing director Wellington Kuwana said exports currently constituted 10% of volumes. Demand for tiles was mainly from Zambia, Malawi, Mozambique and Democratic Republic of Congo.
The company has a capacity to produce 40 000 tiles a day, following the installation of a new plant in December last year at a cost of US$2,5 million.
The production capacity has risen from 15 000 units a day prior to recapitalisation.
However, in spite of higher installed capacity, output is still only 20 000 tiles a day, far below market demand and mainly attributed to limited supply of pallets. Supply of pallets is anticipated to improve by end of this year, and should see production levels rise to meet demand. The upgraded plant had reduced production costs by half.
Kuwana said Zimtile was now the flagship of the PG group, and was expected to contribute 50% of group turnover by the end of 2012. He expected the subsidiary’s profits to grow by between 30% and 40% by year end.
Kuwana dispelled media reports that Zimtile was opening a new manufacturing plant in Zambia, saying the company was instead looking at opening depots in that country, in Ndola and Lusaka, to cater for the rising demand from Zambia.
Meanwhile, Construction Industry Federation of Zimbabwe (Cifoz) president, Philip Chiyangwa, said the industry continued on a resurgence, helped by growth in the mining sector.
“The construction industry is one of the biggest beneficiaries from the growth of the mining sector,” said Chiyangwa. This was however coming after major players in the mining industry such as Zimplats had indicated they would suspend long term expansion projects owing to high costs of production caused by the 60%, 100% and 5000% increase in electricity tariffs, mining royalties and ground mining fees respectively.
Local players in the construction industry continued to face a myriad of challenges, including competition from foreign players, limited credit lines and persistent liquidity challenges which have subdued local demand.
Chiyangwa said he expected the Construction Industry Bill to be finalised soon as this would go a long way towards protecting local players from foreign competition as well as regulating the industry.