Turnall adopts cash upfront model

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TURNALL Holdings Ltd (Turnall) is fine-tuning its model of payment for goods sold to South African customers as it seeks to increase non-asbestos exports, MD John Jere said.

Giving a trading update at the company’s annual general meeting (AGM) last week in the capital, Jere said the company was going for the cash upfront model.

“We want to put in structures for payment because once you go into projects you are at risk in terms of payments and until you put that structure in place you want to be cautions,” Jere added.

He said the company was currently targeting a 12% contribution on total volumes from the non-asbestos plant.

“In terms of volumes, we are targeting that by end of this year the contribution to total volumes should be 12 %, but we want to go back to 20%,” he said, adding contribution of the non-asbestos exports is expected to increase in the second half of the year.

“You know the Rand (South African) has been yoyoing so one would want price competitiveness which we are trying to deal with together with the whole issue of payment.”

In a trade update for the first four months of the year to April, Jere said revenue for the period fell 10% to US$11,3 million compared to the prior comparative period.

Gross profit margins for the period stood at 20%, missing the 29% target due to low capacity utilisation. The company’s capacity utilisation stood at 40%, and just below industry average of 44%.
Jere said the gross profit margins for April and May were picking up in the region of 30%.

He also said the commissioning of a US$2,5 million state-of-the-art roofing tile-making plant was nearing completion. Management believe once the plant is commissioned it will boost output and grow exports
The machine, expected to augment Turnall’s current product range, has the capacity to produce between 45 000 and 50 000 tiles per day.

“It is, however, important to highlight that Q1 performance is normally subdued given the seasonal nature of our business cycle. Overall performance in April and May has given us the confidence that these negative trends will be reversed in the coming months,” Jere said.

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