NATIONAL Tyres Services Limited (NTS) saw its revenue declining by 10% to $6,7 million in the six months ending September 30, due to the declining economic environment.
BY TARISAI MANDIZHA
In the same period last year, revenue was $7,5m.
Operating loss widened to $366 117 during the period under review from $112 567 in 2014 in the same period last year.
In a statement accompanying the group’s abridged unaudited financial statement for the half year ended September 30, NTS chairperson, James Moyo said overall performance was negative with revenue declining.
“The economic environment is expected to remain difficult. Pivotal to its growth strategy, the company will extend its product range to include more value offerings, manage supply chain to ensure key products availability while continuing to rationalise and improve the branch network. This will be complemented with cost containment measures, as the company focuses on returning to profitability in the new term,” he said.
Moyo said the decline in revenue and the pressure on margins were the major contributing factors that resulted in a loss of $222 154 before tax.
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Moyo said the company was slow to address costs in a declining revenue and margin environment, as overheads were at the same level compared to the corresponding period last year resulting to a loss.
He said the price reductions by suppliers were not significant enough to have an impact on contribution, but negotiations are continuing in order to widen products offering profitable prices.
“The declining economic environment continued to affect the operations of many companies. Consequently, increasing unemployment and liquidity constraints curtailed the consumer and in turn, impacted negatively on business and capacity utilisation. In a price sensitive market, focus is more towards value goods and services. The company responded to this challenge by identifying source markets for budget brands,” Moyo said.
During the period under review, growth was recorded in sales of budget brands.
He, however, said there was an overall decline in units sold due to several factors including unavailability of specific product lines.
“Procurement lead times and intense price competition in the market contributed to slowdown. The company implemented initiatives to address these recent developments and the results are beginning to the show. A review of our branch network configuration was undertaken in order to improve accessibility and convenience to customers,” Moyo said.
