BY MISHMA CHAKANYUKA
Listed brick maker, Willdale Limited, says it remains profitable despite having recorded a 22% decline in sales in the five-month period to February.
The company’s sales volumes were down 22% and 18% below prior year and budget respectively largely due to a mismatch between disposable incomes of clients and the prevailing prices.
“Despite the dip in volumes, profitability is way ahead of target due to cost containment and pricing.
“Our cost of sales went up by just under 10% while general price increases have been more than 50%,” said chief executive Nyasha Matonda at the company’s annual general meeting.
“In the first quarter we experienced serious diesel shortages, which led us into stopping operations earlier than planned.
“Availability of diesel and a stable electricity supply will be critical in meeting our production targets”.
Willdale said it is expecting to surpass its production targets this year as production figures in the five-month period were ahead of prior year with low rains working to their advantage.
“Fired production for the five months is 18% ahead of prior year while extrusion is 68% ahead. Rains have been low so far to our advantage,” he said.
Matonda said the company had managed to stockpile critical raw materials such as coal and machine wear parts, which will help in keeping production efficiencies high and boost competitiveness.
The group is anticipating plant availability and utilisation of at least 85% following planned maintenance during the off-season.
During the period under review, the company sold a piece of land, which had an indicative value of $4,5 million, for $11,3 million.
“All targeted debt has since been repaid, strengthening the balance sheet and improving profitability,” the Willdale boss said.
“Excess funds amounting to $4 million were invested in a housing development project.”
Matonda added that the company would take advantage of the growing demand for housing developments by both individuals and institutions.
“Appetite for housing development by both individuals and institutions remains high,” he said.
“The government in its budget for 2019 set aside about $650 million for investment in the housing sector, construction of accommodation facilities at universities and colleges and construction of laboratories at teacher training colleges.
“We will seek to claim our fair share of this potential business.
“We are already working with some of the institutions on the projects that they have started.
“We are also encouraged by the liberalisation of the economy by government, which encourages productivity and profitability.
“Going forward, we expect government capital expenditure on construction projects to increase.
“We have unused capacity to meet forecast demand.”