Liquidity crunch weighs on Willdale

BRICKMAKER Willdale says tight liquidity in Zimbabwe’s economy has affected its cashflows.
The country has been experiencing constrained Zimdollar liquidity after authorities enforced measures to curb currency volatility.
“The business model remains viable and is generating sufficient resources to support operations in the foreseeable future. However, the tight monetary measures implemented to stabilise the economy will affect cash flow generation and operations,” the company said.
“However, it is expected that the liquidity situation will improve post-general elections.”

Willdale said short-term business plans will continue to be reviewed to remain viable and appropriate strategies will be deployed to generate sufficient business given low aggregate demand. Meanwhile, Statutory Instrument 134A of 2023, which was issued last month, significantly resolving the impasse on the issue of value-added tax on bricks implies that the VAT portion on purchases will no longer be claimable as input tax and will therefore increase costs of operations.
“This unfortunately will also increase the cost of construction,” Willdale said.
The company’s sales volumes for the quarter ended June 30, 2023 improved by 26 percent over the comparative period as the construction industry picked up from the rainy season shutdown period. Year-to-date volumes for the nine months were, however, four percent below prior year and still reeling from the effects of low production experienced earlier in the year due to electricity shortages.
“A significant order book has been built to drive sales for the remainder of the year. The company continues to pursue various opportunities requiring bricks in various sectors,” the company said.
“Year-to-date revenue grew by 83 percent to $20 billion during the quarter. Revenue however continued to be impacted by exchange rate distortions.
Willdale said the continued growth in demand for higher-margin brick types has helped to improve the product mix and margins and the focus will remain on efficient production and cost containment given the prevailing economic environment. In the outlook, the company will continue to leverage its brand, superior quality and capacity to dominate the market and sustain margins, subject to a sufficient supply of electricity.
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