Listed brick maker, Willdale Limited says sales volumes for the 9 months period to June were weighed down by prolonged wet season which extended until late April affecting production.
In its Q3 trading update the company said sales volumes decreased by 9 percent compared to the same period in the prior year.
“The decline in sales is attributed to lack of stock which was caused by effects of the late April rains,” the company said.
Cumulative revenue marginally declined by 1 percent in hyperinflation terms compared to the prior year.
“Although average prices have been affected by exchange rate disparities, product mix remains favorable and this is expected to buttress margins for the full year.”
The company however bemoaned the recent tightening of lending terms and conditions by the central bank as presenting challenges in raising working capital.
The Central Bank raised interest rates from 60 percent to 80 percent beginning of the year to manage money supply in the economy which was putting pressure on inflation.
“However, the business model in place is generating sufficient working capital to support the business in the short term,” said Willdale.
The company added that production is now ahead of target which should provide stocks to cover the sales gap in fourth quarter as demand remains high, driven by cluster home developments and individual home builders.
“Increasing demand for bricks to meet the high demand for housing will drive revenues in Q4. Plant capacity utilization which is currently averaging above 80 percent should provide sufficient stocks to meet targeted sales volumes for the ensuing quarter, provided electricity supply remains reasonable.”