National Tyre Services (NTS) is targeting a 25% growth in revenue in the current financial year ending in March 2012 driven by a resurgence of the mining and agriculture sectors both expected to grow by over 30%.
In a trading update the first quarter period April to June 2011 production of new tyres units was 12 441 from 15 690 same period last year while retreaded units went up by 11% to 5 739 from 5 164 units same period last year.
“Despite revenue being 40% up on the same period in prior year, new tyre units declined due to deliberate bias towards high- value added products given limited credit and working capital financing,” said NTS chief operating officer Tafadzwa Choto.
NTS manufactures retreaded tyres, tread rubber, rubber moulded products, distributes Dunlop and other brands products, supplies accessories for motor vehicles and offers tyre fitting and wheel alignment services.
Choto, however, said at the end of the first quarter revenue and profits were in line with budget expectation’s although freight, fuel costs and wage increases had been the major overheads drivers.
He said the national fleet was growing and will continue to grow in 2011 with most of the fleets recapitalising.
The chief operating officer said going forward the company will seek to align distribution channels and supply chain to economic drivers.
The distribution sector is expected to have reciprocal benefits with mining, agriculture and manufacturing while there would be a volume-driven growth through aggressive marketing efforts.
“The market is forecast to be illiquid due to absence of meaningful external funding and interest rates will remain above 15% per annum. Value addition (solutions) will be a major area for increasing market share,” said Choto.
“Appetite for credit is still high, and so is the default rate. Debtors and credit management remain key focus areas, but there is a trade off with sales growth.”
Choto said the group was considering opening its Bulawayo factory.
The group has operational branches in Harare, Bulawayo, Mutare, Chinhoyi, Masvingo, Gweru and Kwekwe while branches in Chiredzi, Marondera, karoi, Hwange, Chegutu, Bindura are dormant.
Group’s profit from continuing operations stood at $516 000 from $189 455 for the year ended March 2011 while profit before tax was $862 000 from $142 084 the same period last year.
Revenue grew to $11,3 million from $6,1 million from the same period last year.