BRICK manufacturer, Willdale Limited chief executive Nyasha Matonda says inflation and the depreciating Zimbabwe dollar negatively affected the company’s operating environment in the five months ended February 2020.
BY TATIRA ZWINOIRA
The official annual inflation rate stood at 540,16% for last month driven by the depreciating Zimbabwe dollar that continues to lose its value standing at US$1:$42, on the parallel market.
“Since our last update to the market for Q1/2020, inflation and an unstable currency have continued to impact our operating environment. This has the effect of diminishing disposable incomes thereby affecting the individual home development cluster of our market besides increasing our cost of production,” said Matonda at Willdale’s annual general meeting in Harare yesterday.
He said the company continued to leverage off available cash resources to purchase raw materials and spares to maintain high production efficiencies.
“We expect to surpass our production targets for the year subject to availability of adequate electric power, diesel fuel and imported spares and materials,” Matonda said.
“We will continue to focus on cost management and optimal pricing to protect margins in the face of rising inflation. We anticipate profitability to sustain in the current financial year.”
While the national housing backlog stands at 1,3 million, consumers are having their wages increasingly eroded by the depreciating local currency, making it expensive to purchase building materials.
“The national housing backlog is growing by the day while appetite for infrastructure development by government and other institutions remains high. Delivery of these projects will depend on availability of suitable financing,” Matonda said.
“We are hopeful that government’s initiatives to stabilise the economy for eventual growth will soon be successful. Capacity is available to meet forecast demand.”
However, despite the economic difficulties, Willdale’s profitability in the historical terms for the period under review had grown above the inflation rate due to an effective pricing mechanism and cost containment measures.