BY KUDZAI KUWAZA
DISTRIBUTOR and retailer of new tyres and tubes, National Tyre Services (NTS) says improved power and fuel supplies during 2020 helped the firm scale up production, with new tyre sales rising 17% during the half-year ended September 30, 2020.
Government announced blanket lockdowns during most of last year in response to an outbreak of the deadly COVID-19 pandemic.
Most firms classified as non-essential services were shut down during the period, freeing up power supplies to a few companies that were operating.
In a commentary accompanying financial results for the period, NTS chairman Rutenhuro Moyo acknowledged that improved power and fuel supplies underpinned the rise in output, although Zimbabwe’s operating environment remained turbulent.
“While the operating environment remains challenging, some key changes in economic fundamentals over the period resulted in an improvement in the company’s fortunes,” he said.
“In particular, we had increased cost-effective production uptime due to more frequent availability of electricity and fuel over the first half of the financial year.
The company’s access to foreign currency through the Reserve Bank of Zimbabwe auction system, which was introduced in 2020 also improved and resulted in stable prices. These developments, coupled with the support from our bankers, impacted positively on the business and resulted in increased inventories which in turn drove sales levels up. This was achieved despite the negative impact of the COVID-19 pandemic,” Moyo told shareholders.
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However, the NTS boss said there were also “unprecedented challenges” stemming out of the pandemic that the firm had to deal with.
“Retail branches closed in April and May 2020 following government’s directive to curtail the spread of coronavirus. Once re-opened, business was affected by the restrictive lockdown measures, which impacted production and trading hours as well as access to suppliers,” he said.
Re-treading operations were affected by the closures in April and May 2020 as part of a government directive to curtail the spread of the COVID-19 pandemic.
NTS’s largest customers, the fleet operators, struggled to return to normal business.
Inflation-adjusted sales, at $189,8 million, were 21% below the previous corresponding period.
Other income, made up largely of rental income and foreign currency exchange gains, at $14,2 million, was 3 249% above the previous period, spurred by foreign exchange gains.
Moyo said improved profit margins were realised on all products and service lines.
That, he said, coupled with cost containment measures implemented by management, resulted in an inflation adjusted after tax profit of $35,3 million.
The NTS boss revealed that borrowings decreased by 65% during the review period, compared to the beginning of the period.
The rise was mostly attributable to charging year-on-year inflation.
He said NTS’ financial performance and position was strong.
The Zimbabwe Stock Exchange-listed outfit did not declare a dividend for the period citing the need to conserve working capital and reinvest in building inventories for the peak period.
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