Turnall reports half-year loss

ZIMBABWE Stock Exchange-listed manufacturing concern Turnall Holdings has reported an after-tax loss of $111 875 for the six months to June compared with a profit of $874 118 recorded during the same period last year due to rising costs.

Report by Business Reporter

The company’s revenue of $18,9 million was 2% above last year’s figures for the same period. The revenue, according to the financials, marginally rose due to a decline in exports. Selling and distribution expenses, however, increased to $514 794 from $45 821 due to price adjustments made to meet competition.

The company announced that gross profit margin which stood at 23% was lower than the 30% achieved in 2012 mainly because of lower than plan pricing during the first quarter of 2013. The operating profit margin was, as a result, affected and at 7% against 16% for the same period last year.

“The financial results for the period under review reflect two business approaches to dealing with an economic environment that to a large extent remained fluid.
Pricing and margins during the first quarter of 2013 were aligned to the market in an effort to retain market share. With a high fixed cost structure and a lower than normal capacity utilisation, profit margins reduced significantly against a generally high cost of production,” said company chairman Herbert Nkala.

“Exports, despite a slowdown, represent another key growth area. The company has started supplying into Zambia and has a robust plan to enter into neighbouring markets in the coming months and supply a full range of products including the new roofing tiles.”

Capacity utilisation for the manufacturing sector last year plunged to 44% from 57% in 2011 due to several problems affecting local industry. The Confederation of Zimbabwe Industries says industry output is this year expected to further decline due to underfunding, stiff competition and high operating costs.

“The post-election era should usher in positive economic growth and that in turn should see a growth in investment in infrastructure and housing. As a business, we believe that a growth trajectory for the economy will see us benefit in the areas of housing construction, water and sewer reticulation and an introduction of export incentives,” said Nkala.

8 Responses to Turnall reports half-year loss

  1. josefa chinotimba August 23, 2013 at 9:48 am #

    The damage has just begun.This is the work of Zanu pf,shame.

  2. pchitovah August 23, 2013 at 11:02 am #

    josefa dont lie to the people ask the company’s accountants and be better informed. these results relates to a period before elections. for the period ending June 27 2013 by which time even tsvangirai was basking in the glory of a self expected resounding victory. the key aspects here are:
    1.A high production cost base being caused by, a) we import fibre from as far as Turkey Russia and Brazil. the landed costs in Zim is enough to erode our margins dismally
    2. intensifying competition from imports. Everite south africa is in the same business. their landed material cost is around 60% of ours hence they got a pricing advantage.
    3. capacity utilisation due mostly to unreliable fibre supply sources continue to tumble and with a high fixed ovehead cost base then your ultimate production costs per unit will be sky roketing.
    4. Notwithstanding the inavailability of funding in the economy. we have been victims of short term very expensive finance obtainable from our local institutions whith no alternative choice as our suppliers need cash upfront. so we look forward to better year end exit now that Gushungo our last hope have been installed at the helm once again. we believe we will relive our old days of the 1999 and before. that is before this headless faceless jukwalicious creature called MDC was formed. together as an industry we can make it. lets not politicise the non political aspects. you end up saying ndakabirwa maresults iwe wazvamburwa zvakaomarara because the line of thing the thinking process in itself is a flawed and rotten process. Aluta Continua!!!!!!!

  3. chief JS August 23, 2013 at 11:38 am #

    pchitovah,you started well by articulating your points but in the end you became another chinotimba,yes i like onething u have a grasp of the issue but never follow matsimba a chinos,ukaona mpengo achimhanya asina kusimira iwe hauchakatanura omumhanyisa tozoshaya mutsauko pavaviri.dont 4forget that there is the anti-asbestos lobby and issue of low capacity utilization and a less uptake by the local due non-availability of mortgage funding,i doubt the previous government had anything to do with turnalls performance and am less optimistic about the incoming rulers considering their history,i say hats 2management 4 exploring nu markets,ndokufunga pabasa

  4. Air Commando August 23, 2013 at 2:35 pm #

    Mese muri mha……t….a……
    Tsvangirayi apinda papi ipapa

  5. Khule August 23, 2013 at 4:29 pm #

    The problem with Turnall is that they still try and be elitist in our current environment.
    Its not good for business, esp when the small man on the street contributes 77% of the highest single GDP earner. If a client comes to your HQ and you tell them to go to another site/selling point, to pay for goods not in stock and without a lead time, what do you expect?
    The lack of a human face is eroding the business.

  6. Customer August 23, 2013 at 5:48 pm #

    The Bulawayo branch of turn all certainly requires a leaner and meaner workforce. My observation is that there are overstaffed and service is poor and there is certainly too much paperwork. Everyone thinks they are boss. This obviously is only a small arm of the operation but I am sure is symptomatic of a generally poorly run concern.

  7. Mob Deep August 24, 2013 at 1:31 pm #

    I think its worthwhile to explore the causes that make our economic environment “harsh”. Why do we have high landing costs? Why do we fail to compete internationally? Seems to me that Turnall is a good company handicapped by a systemic problem inherent in our macro -economic framework. For example, are our tax incentives encouraging to the exporter. Probably not. Why is the economy facing acute liquidity problems? Obviously, the sovereign debt issue contributes immensely. Furthermore, the lack of clarity, consistency and coherence in policy formulation prevents more cash flowing into the economy through our financial instituitions. Prime suspect: Indigenisation. Read any Chairman’s review on Company’s financials and you see that this indingenisation policy is half-baked. While its easy to blame management at Turnall for underperfomance, i think they equally deserve credit for ensuring the firm’s survival of financial hail storms like the 2008 Zim meltdown. Look carefully, the companies that are perfoming are those that have some sort of access to fin. markets across borders and are also backed by strong shareholders eg Delta-SAB Miller, Econet-Econet Wireless Global, OK-Investec, Natfoods-TigerBrands, PPC-PPC South Africa, haa list is endless. AnaMBCA, StanChat, CBZ, recently TM has been picking up pace cz of Pic n Pay partnership. Fact is that hyperinflationary period incapacitated us. We need a sort of bailout package organised by private players as done in deals i’v mentioned above. Govt shud play a regulatory role not an active part. Especially govt yemuZim, its simply incompetent when it comes to business issues.

  8. Customer August 24, 2013 at 6:49 pm #

    As painful as it may sound, I think that it’s early days to be getting all worked up about tax incentives and macro-economic frameworks. Bottom line is Zim is not in that space and is still basically in dog eat dog mode. I think that companies require some creativity and some level of thinking outside the box.
    Surely there must be other product lines that such companies as Turnall can pursue that address the needs of zim consumers and regional markets.
    I have been buying plant pots from Turnall for the past donkey years and they have stuck to the same old design and frankly they are just plain boring!
    The residential construction market has been ticking along and Turnall really should be proactive in creating opportunities for themselves by going into the upcoming suburbs and getting involved and seeing how they can stimulate the local market into having an appetite for their products!
    By the way turnall do you make ironing boards?

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