NATIONAL Tyre Services Limited (NTS) says the depreciating Zimbabwe dollar was affecting demand for its products, after recording a 37% decline in volumes for the third quarter to December 31, 2019.
BY TATIRA ZWINOIRA
In a statement, company secretary Stewart Mandimika said the trading environment was expected to remain challenging.
“Power outages continued to affect operations although the impact varied depending on location.
Shortage of foreign currency persisted while fuel supplies remained constrained. The economic environment remained difficult with the local currency continuing to lose purchasing power, thus leading to a weak aggregate demand in the economy,” he said.
“Overall, volumes decreased by 37% when compared to the corresponding quarter in the prior period. Foreign currency constraints, as already alluded to, power outages and dwindling incomes were the main factors which contributed to the decline.”
During the period under review, services volumes decreased by 32% compared to 2018 comparative period due to power outages which frequently interrupted operation of machinery.
The sales of new tyres declined by 63% compared to the same period last year due to limited availability of foreign currency, particularly in the banking sector, to import stock.
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“The trading environment is expected to remain challenging. However, with our wide branch network country-wide and the ongoing phased programme to upgrade branch image and services we remain confident that demand for our products and services will continue to increase,” Mandimika said.
Despite the poor performance, NTS reported that its retreading volumes for the quarter increased by 11% compared to same period last year due to strong demand from customers.
Tyre repairs also increased by 5% compared to the same period last year in line with retreading performance.
This comes as retreading and tyre repairs had become a cheaper alternative to buying new ones as consumers are spending more cautiously considering the local currency’s continued erosion.
Last month, NTSL notified its shareholders and other stakeholders that it had delayed the publication of the unaudited financial statements for the half year ended September 30, 2019 on the back of the hyperinflationary environment.
