Turnall banks on ongoing projects

TURNALL Holdings (Turnall) says it expects the completion of its ongoing projects to lead to increased revenue, profitability, exports and a sustainable improvement in quality and production efficiency.
The construction-materials manufacturer is currently investing in several projects which are expected to be operational next year.
“Despite the challenging business environment, the group has embarked on a major capital expenditure programme aimed at restoring fibre cement production in Harare and introducing the production of GRP pipes to take advantage of this fast growing local and regional market.
“Production of IBR sheeting will be expanded and the roof tile line will be refurbished. A significant investment is also being made in the Bulawayo plant aimed at the production of New Tech Fibre cement sheeting mainly for the export market. The completely new sheeting line for Harare will utilise the latest technology with the aim of improving production efficiencies and reducing costs,” board chairman Grenville Hampshire said in a statement accompanying the group’s financials for the year ended December 31, 2022.
Hampshire added, “Although payments for these projects will largely be made in 2023, the main production lines are expected to become operational in 2024.”
During the year under review, the group’s capital expenditure was $622,5 million compared to $60,2 million in 2021 mainly aimed at improving production efficiencies.
Despite a 29 percent reduction in sales volumes, Turnall’s inflation adjusted revenue grew by 16 percent to $8,4 billion from a comparative prior year of $7,25 billion.
The group’s sales performance was mainly driven by a deliberate move to focus on high value but low tonnage products. However, the liquidity challenges and low aggregate demand prevailing in the economy hampered its efforts to realise its full potential.
Gross profit for the period was 31 percent compared to 41 percent achieved in the comparative year, with margins under pressure due to the official and alternative market exchange rate disparities whose negative impact on the cost of doing business could not always be sustainably recouped through selling price adjustments.
Subsequently, Turnall’s cost of goods sold went up by 35 percent. The operating expenses to sales ratio for the year stood at 52 percent compared to 23 percent in 2021 with the sharp increase being attributed to substantial non-recurring employee terminal benefits amounting to $1,22 billion, which were provided for during the year.
“There was also a general increase in prices in the economy as evidenced by the hyperinflationary environment but this was significantly mitigated through cost containment measures put in place by management,” Hampshire said.
Other income increased by 1,201 percent to $1,1 billion due to a fair value gain on financial assets of $462 million and exchange gains of $505 million.
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