Power blackouts weigh on Willdale

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BRICKMAKER Willdale says poor electricity supply has hampered its operations, particularly in the extrusion and firing of structured kilns, resulting in reduced output.
Since last year, the nation has had erratic power supplies, which has hit businesses that have had to rely on costly alternative diesel-powered generators.

The brickmaker’s chief executive, Nyasha Matonda, told shareholders attending the company’s annual general meeting that the electricity supply situation remains poor, with load shedding averaging eight hours a day.
“Running at such low throughput puts pressure on product availability, as well as on efficiencies and cost per unit,” he said.
“In addition, cost pressures from raw materials and service providers who index prices on parallel market rates have impacted on margins.”
Willdale’s inflation-adjusted revenue for the first five months to February 2023 increased by 30 percent compared to the same period in the prior year.
Sales volumes were, however, nine percent below the prior year.
“The first half of the year will result in induced profitability due to lower-than-expected volumes. We expect profitability to improve in the second half of the financial year,” Matonda said.
He said the company expects to ride on the huge demand for housing in the economy despite the challenging operating environment.
“Institutions and individuals are making significant investments in cluster home developments, while the government is also expected to roll out housing development projects in all provinces, among other projects. These projects will keep our order book healthy throughout the year,” Matonda said.
He expressed hope about the synchronisation of Hwange 7 and 8 units in mitigating power challenges.
“We continue to hope that electricity supply from Zesa will soon improve, as it is very critical to our production process,” he said.
Willdale reported an inflation-adjusted profit after tax of $4,3 billion for its fiscal year ended September 30, 2022, representing a 537 percent rise from the previous year.
Fair value gains of $1,6 billion and monetary gains of $4,1 billion significantly contributed to the company’s performance.
Operating profit was down 137 percent to a loss of $357 million, as the company reported net exchange losses of $66 million. Operating expenses increased by 49 percent in inflation-adjusted terms, which caused the operating expenses-to-revenue ratio to increase to 25 percent from 18 percent in the previous year.