Brick-maker, Willdale Limited is still pursuing negotiations for the disposal of some of its idle assets as it seeks to raise funds to recapitalize operations.
The company issued another cautionary statement to shareholders today.
“Further to a Cautionary Statement published on 3 August 2022, the Directors would like to advise Shareholders and the general public that negotiations for the disposal of certain idle assets, whose outcome could have a material effect on the business and the share price, are still in progress. Shareholders are, therefore, advised to continue to exercise caution and to seek professional advice when dealing in the Company’s shares.”
The group recently reported depressed volumes for Q3 to June which were 9 percent down due to prolonged wet season which extended until late April affecting production.
“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.”