- In Q1 FY'22 trading update, NTS reported 163% volume growth
- RBZ promised to clear the forex backlog in 45 days
- About NTS
Harare – Listed tyre distributor and retailer, National Tyre Services has tied any future possible growth of the business to the availability of foreign currency which is critical in procuring stock for the company's operations.
Earlier in January 2021, the company credited the foreign exchange auction market for the boost in the company's sales volumes by 17%.
Companies in Zimbabwe obtain foreign currency through the Foreign Exchange Auction Market which was instituted in June 2020 to avail funds to formal businesses, thus providing a modicum of pricing stability among recipients of the funds allotted.
In a statement accompanying the trading update for the first quarter ended 31 June 2021, the company said, "Availability of foreign currency to import stock is key for sustainable business growth".
The company reported a 163% volumes growth across all operating units in its first quarter ended 31 June 2021 with new tyres volume increasing by 162% while tube volumes surging to 160% owing to robust survival strategies employed by the company.
Meanwhile, the forex market is being faced with an austere test of high backlog, with some companies complaining of waiting up to 4 weeks to retrieve the funds, undermining confidence in the system and opening a widening gap between the official exchange rate and the black market rate which has surged above RTGS130 against a single greenback denomination.
Earlier this month, the Central Bank was facing a backlog of about US$200 million, which the government, through the Ministry of Finance and Economic Development Secretary George Guvamatanga promised to clear in 45 days.
However, the injection of almost US$1 billion in the country by IMF is expected to boost foreign currency liquidity in the country as Finance and Economic Development Minister, Professor Mthuli Ncube promised to use it to strengthen the local currency.
On Tuesday last week, the foreign currency auction registered a new record for the greenback’s demand as allotments surged to US$51,69 million, breaking the previous record of US$49.10 million.
Signalling the importance of foreign currency on the company’s growth was the largest amount of forex assigned for the purchase of raw materials, machinery and equipment which amounted to US$14,9 and US$8,3 million on the main auction.
National Tyre Services Limited is the largest distributor and retailer of new tyres and tubes for the automotive industry in Zimbabwe, with 13 retail outlets nationwide while 4 of these operates in the capital Harare.
Popular tyre brands sold by the company are Dunlop, Firestone, Bridgestone, Yokohama, Bandag, Pirelli, Regal and Comforser.
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