NTS focuses on full business recovery

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NATIONAL Tyre Services (NTS) is targeting a full business recovery in the second half of the year following a series of cost-cutting initiatives.
The firm saw a 106,25 percent rise in inflation adjusted operating expenses to $6,6 billion in the half year ended September 30, 2023 (H1 2024) from $3,2 billion in the comparative period.
This is traditionally occasioned by inflationary pressures.
“The company’s main thrust is to procure stocks for the current high season and capitalise on increased demand,” NTS chairman Rutenhuro Moyo said in a statement accompanying financials.
“We are optimistic that the continued use of US dollars as announced by the government will stabilise industry operations and improve availability of foreign currency to import tyres and retreading rubber.”

Due to the cyclical nature of commodity-dependent economies, the country has been experiencing accelerated currency depreciation for some months.
The 488 percent swing, Moyo said, in exchange rates over the first half of the fiscal year had a considerable impact on industry operations.
“Even though there was modest market growth of which NTS managed to capture its own share, stellar performance was hampered by the exchange rate movements and the unavailability of foreign currency.
“The government’s intervention measures to address the exchange rate volatilities and control inflation somewhat stabilised the rates on the official exchange market towards the end of the reporting period,” he said.
Among other challenges, NTS was not spared from the impact of erratic power supply.
Sales increased by 135 percent to $15,3 billion from $6,5 billion in the comparative period.
Consequently, the company’s operating profit went up 319 percent to $3,1 billion from $744 million in the prior period.
NTS incurred a loss before tax of $7,9 billion from a loss of $1,8 billion previously owing to foreign exchange movements.
As for operations, the volume of new tyres sold increased by 13 percent thanks to better stock supply.
“Availability of Dunlop tyres enhanced retention of business from several blue-chip companies from April to September 2023,” he said.
“However, the long cash cycle of budget brands made it unprofitable for the company to import budget tyres from the far East given the high interest rates and short-term nature of available bank facilities.”
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