BY MISHMA CHAKANYUKA
ASBESTOS products manufacturer Turnall Holdings posted a 31% decline in sales volumes in the third quarter ended September 30, 2019 owing to subdued demand for the company’s products.
In a trading update, the chairperson, Rita Likukuma, said year to date sales volumes were 28% below the same period last year.
“The group’s sales volumes for the quarter were 31% below the prior year comparative quarter while the year to date sales volumes were 28% below the previous year comparative period.
The business was adequately stocked during the period under review; hence the decline in volumes was attributed to low aggregate demand,” Likukuma said.
She said the group adopted a regional export strategy to generate foreign currency and reduce the impact of declining sales volumes in the local economy.
“Export sales volumes for the quarter contributed 2,8% of sales volumes compared to 0,2% in the previous year comparative quarter. Export sales volumes for the nine months period contributed 2,5% of sales volumes compared to 0,1% in the previous year comparative period,” Likukuma added.
The group acquired adequate raw materials to meet production requirements up to the end of the year and will continue to focus on cost-cutting strategies and improving profitability.
“Despite the challenges, Turnall remains focused on its strategy of reducing costs, improving profitability and strengthening its statement of financial position. Unaudited management accounts for the nine months to September 30 on a historic cost basis indicate profits significantly higher than the comparable period of 2018 while total net borrowings have been reduced to below 10% of capital employed.”
Proplastics also recorded a decline in its sales volumes during the same period due to subdued product demand. “Demand for the group’s products continues to be subdued, as was the case at half year, and the total sales volumes for the third quarter declined by 50% compared to a similar period last year. Cumulatively, the tonnage for the nine months is 37% below prior year,” the company’s board chairperson Gregory Sebborn said in the company’s trading update.
The group expects demand for its products to remain subdued in the short term due to the current economic environment and expects it to improve in the medium to long-term given the need to rehabilitate the water and sewage infrastructure as well as irrigation resuscitation initiatives.
Sebborn said electricity supply remained a challenge during the period and the group relied on diesel-powered generators, leading to an increase in production costs. On the other hand, the group also faced access to water challenges and it relied on purchasing bulk water for normal consumption and process cooling.
Proplastics’ position on foreign currency liabilities and assets remained manageable at US$414 000 while borrowings also stood at manageable levels.
Sebborn said the group is looking forward to the removal of duty on certain raw materials and that the general import permit requirement be maintained. “We also look forward to our call for the removal of duty on imported raw materials being considered favourably by the authorities. Further, we recommend that the general import permit requirement be maintained for the products that are manufactured locally as this will reduce outward flow of foreign currency.”