TURNALL Holdings Ltd plans to make a US$4 million fresh investment towards new equipment and enhance capacity on high-end products as part of a repositioning exercise that is expected to turn around operations, management has said.
The move is expected to drive higher margins products as compared to the company’s traditional focus on low-income products, Turnall MD John Jere told businessdigest on the sidelines of the company’s half year results for the period to June 2013.
“We are actually going to continue investing in this area which is the high value product area. We will spend US$3 million to US$4 million in the next two years to consolidate our market presence,” Jere said.
He said the asbestos cement products manufacturer was seeking to build capacity in the medium and top tier market segments through new or expanded product offering and spread the risk in an economy suffering from illiquidity.
“The low to low end market is the most affected by liquidity,” Jere said.
Turnall commissioned a US$2,5 million state-of-the-art roofing tile-making plant to boost output and grow exports . The plant is expected to augment the current product range, and has the capacity to produce between 45 000 and 50 000 tiles per day.
In the period to June this year, the group reported a marginal increase in revenue to US$18, 96 million compared to US$18,52 million last year, with US$1,7 million and US$11,01 million having been recorded in the first and second quarter respectively.
Operating profit stood at US$1, 4 million, down from US$ 2, 5 million in 2012.
Turnall FD Robert Dube said the business was weighed down by low demand and low capacity utilisation but is optimistic of breaking even in 2013.
Jere said total volumes stood at a3 071 tonnes (t), 7, 81% up on 2012 30 675t.
He said 90% of these came from local building products or endurite.
“We lost 20 to 30% competitiveness on our export business after the decine of the south African rand,” Jere said.