Turnall Holdings Ltd returned to profitability in the full year to December 31 2015 (FY15) helped by diversification of suppliers which resulted in costs savings for the group.
By Chris Muronzi
MD Caleb Musodza said at an analysts briefing in the capital for the company’s FY15 results the group was looking at lowering finance costs which ate into the bottom line.
Finance costs amounted to US$1,4 million while profit from operations amounted to US$1,5 million, leaving a pre-tax profit of US$54 000.
In FY14, the company made a US$14 million loss.
The company has loans and borrowings which are current amounting to US$2,7 million.
Revenue stood at US$29 million from US$33 million in FY14.
He said the company was looking at refinancing its debt, which is currently attracting interest rates of 16% per annum.
Musodza said there was scope the cost of the debt could be brought down to around 10%.
“We are in discussions with financial institutions to refinance the debt which is attracting interest of 15% annually. We want the debt to attract rates of around 10%. The 6% saving will translate to profit,” he said.
Musodza said the company was looking at lifting output at its Bulawayo plant. A total US$1 million is needed for the plant upgrade, he said.
Musodza said the operating environment was tough with customers demanding discounts.
Going forward, management said they will keep a close eye on margins. The company is also looking at various funding options to capitalise the group.
Retooling the factories with modern equipment is also a priority for the group. Margins improved to 23% from 4% in the same period comparative.
Revenue was down 14% to US$29 million. Exports contributed a pultry 1% to revenue. Total comprehensive income for the year was US$114 932 from US$15,4 million in FY14.
Despite a challenging business environment, management said it was optimistic a combination of rightsizing the business and further cost reduction would improve profitability.
“The order book for infrastructure projects remains firm. Together with the exclusive distributorships signed withstrong brands in PVC, HDPE, and GFP, the group is well equipped to handle all customer piping preferences.
The work that was done during the year with respect to streamlining the group’s operations and cost base has created a solid base to further improvements in performance in the financial year 2016 and beyond,”the company said in a statement attached to its financials.