Willdale back in the black

HARARE - Zimbabwe Stock Exchange-listed bricks manufacturer Willdale Limited (Willdale) has bounced back to profitability on the back of volume increases and better cost management.

In the year to September 2015, Willdale recorded a $214 086 profit compared to a loss of $931 011 registered in the previous corresponding period.

The company’s chairman, Alexander Jongwe, on Friday said the brick-making firm’s turnaround strategy was now bearing fruit.

“Prior year investment in refurbishing plant and acquisition of equipment resulted in improved capacity utilisation to 70 percent up from 60 percent in 2014. Green and burnt production volumes grew by 30 percent and 22 percent, respectively compared to the prior year,” he said.

Jongwe noted that better efficiencies and cost management led to reduced cost of production.

“The plant is now poised to meet production in excess of 100 million bricks per annum. We continue to explore various means to improve efficiencies and further reduce the unit cost of production without compromising on the high quality standards required by our customers,” he added.

In the period under review, Willdale’s improved product supply capability helped restore confidence in the market leading to the company recapturing some of its lost market share.

Sales volumes increased by 40 percent over the prior year, while product mix remained skewed in favour of low margin common bricks.

“This together with increased competition in that product range, led to an 11 percent decline in average prices.

“Several initiatives will be implemented in the new year to improve competiveness and regain more market share,” Jongwe said.

In the 12 months to September, Willdale revenue at $8,8 million was up 25 percent over the prior year driven by a 40 percent increase in sales volumes.

However, average prices declined by 11 percent.

The company noted that an operating profit of $1,2 million — compared to an operating loss $0,6 million — was realised after charging $1 million to depreciation of property, plant and equipment and $0,07 million in non-recurring expenses.

“Cost management initiatives undertaken during the year resulted in a 22 percent decline in the average production cost compared to the prior year.

“Net cash flows totalling $0,5 million were generated from operations despite the difficult operating environment.

“Capital expenditure for the year amounted to $0,327 million and was financed through cash flows from operations.

“The positive results are encouraging and reflect the success of the turnaround strategy that the company is pursuing,” Jongwe said.

The company did not declare a dividend in the period under review with the intention to preserve cash for working capital.

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