Turnall Holdings First Quarter Profits Up Despite Tumbling Export Earnings

Building and Construction material manufacturer, Turnall Holdings posted a 21 percent profit surge during first quarter (Q1) of 2019, recording US $ 8.5 million from US $ 7 million realized same period the previous  year, but a tough year in export sales plunged receipts to 0.13 percent from 0.51 percent realized in 2018 first quarter.

Export receipts recorded US$ 600 000 during the first three months of 2019.

Profits were mainly driven by a combination of improved trading on the local market, selling of products in USD currency and inflated RTGS currency with a USD base.

“The group is trading profitably, higher compared to the same period last year. The company’s cash flow has improved significantly for the first quarter compared to the same period last year. The cash generated was reinvested in working capital and we have seen some gains during the first quarter,” group managing director Rose Chisveto told shareholders at the company’s annual general meeting this morning.

But uncompetitive prices on the regional markets contrasted with high operational costs for the company.

“Export sales contributed 0.13 percent compared to the previous year’s 0.51 percent and this is attributed to uncompetitive pricing in the region. Generating US$ 600 000 for first quarter from exports sales. These funds were used to import raw materials and spares,”

“Despite a 40  and 30 percent drop in sales volumes and production output respectively, gross profit margin for the quarter was 46 percent compared to last year’s 39 percent,” added Chisveto.

However despite profitability, the company still faced macro-economic headwinds such as liquidity constraints, subdued aggregate demand, uncompetitive pricing due to the fixed exchange rate that was witnessed in the first two months of the year of 1 RTGS equivalent to 1 USD.

As part of its sustainability reforms, the company is planning on undertaking a raft of cost containment measures coupled with projects expansion to improve output.

Permanent employees have been trimmed to just 165 out of a total of 364 staff, the remainder being contract employees.

“Cost containment and business rightsizing will remain a top priority to ensure profitability. Plans are underway to upgrade non-asbestos plant in Bulawayo in order to improve production efficiency and reduce production costs. As In March mining levels were 364 employees and mostly we have skewed towards contract employees, only 165 employees are permanent employees,” Chisveto added.

Intermittent power supply has also affected output volumes, as production schedules are constantly disturbed.