Brick manufacturing company Willdale Limited continued to experience working capital constraint resulting in low efficiencies and high unit costs for the year ended September 30 2011.
The company registered a turnover growth of 140% to $3, 7 million as compared to $1, 5 million on the same period last year driven by a 60% increase in sales volume.
Despite the increase in sales volumes they remained below breakeven point resulting in an operation loss of $1, 2 million being incurred after charging $392 158 to depreciation of property, plant and equipment.
“Insufficient working capital presented challenges to operations resulting in low efficiencies and high unit costs,” said Willdale Limited chairperson Tendayi Mundawarara
“Capacity utilisation averaged 30% for the year under review while down time was 49%. Most of the downtime was as a result of plant breakdowns, inadequate mobile equipment and power outages. “Additional funding is required to reduce downtime of plant and to improve production efficiencies.”
Mundawarara said demand for bricks remained higher than available stock adding that an increase in production volumes besides improving margins would reduce supply lead time and increase the rate of servicing back orders.
He said a marketing strategy to reposition the brand in the face of anticipated growth in the industry was under development.
Mundawarara said although the operating environment was better compared to 2010, liquidity challenges hampered efforts to refinance the business and as a result capacity utilisation remained below optimum levels of production.
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He noted that the resurgence of mortgage lending provided a necessary stimulus in the industry but growth in industry remained stunted.
“We are encouraged by the signs of recovery in the construction industry in the coming financial year. This evidenced by the continuing growth in mortgage finance and allocation of funding towards housing development by government and the private sector,” said Mundawarara.
He said the company has put in place plans to increase throughput and benefit from the anticipated growth in the industry.
“We anticipate that performance for 2012 will be much better,” said Mundawarara.
