Turnall Holdings Limited has posted a gross profit of $3 million in the half-year-ended June 30 2015, which is 254% up from the same period last year due to better overhead recovery and procurement savings initiatives.
BY TATIRA ZWINOIRA
Turnall managing director Caleb Musodza told an analyst briefing on Wednesday the group was working on reducing costs and ensuring that it was paid for what it sells.
“In our business, it was very clear that our costs were driven by how we are buying our raw materials, running the plant and utilising those raw materials and also overhead costs and we have relentlessly focused on these ones,” Musodza said.
“On the revenue side, we have focused on capturing quality sales, make sure you get paid for what you sell and that is exactly what we did so that you minimise the chances of provision for bad debts. So, we focused on our revenue and cost side and this is the benefit that we have seen and we are going to continue on that till the end of the year.”
Expenses were down by 42% on last year’s figures while revenue was up 9% to $14 million.
As a result, profit before tax was up by 114% to $489 738 over the same period.
Turnall Holdings capacity utilisation year to date for its fibre cement and concrete tile plants was 45% and 65% respectively.
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Musodza said the company was also managing two key loans from BancABC and FBC Bank that they expect would be fully paid by 2017, managing to reduce the interests’ rates.
“We have got two key loans, FBC and BancABC because of our payment history where we were coming from we had actually gone into the punitive range in terms of interest rates. So, we managed to sit down with them and restructure the terms. Coming out of those discussions we have been able to take down the interest rates to 16%,” Musodza said.
Last month, the company also benefitted from getting fibre from Russia which is 20% cheaper compared to the one coming from Brazil.
Fibre is one of the main raw materials that the company uses to manufacture most of its products.
“We have started using the cheaper fibre and this is going to be key in driving our profitability in the second half. We have come up with a system where every quarter we place orders for fibre for the incoming quarter and within that process we choose the supplier with the best terms,” Musodza said.
“It just so happened that the fibre in Russia tends to be cheaper and there are more suppliers in Russia than Brazil which is why we made that switch.”
