- Strategic Store Closures: Closed four retail outlets
- Remarkable Profitability: Achieved profit of ZWL 91 billion, reversing a substantial loss of ZWL 17 billion
- Net profit margin of 35%, indicating a strong recovery and improved financial performance
- Operating loss of 25.9 billion
Harare- In a strategic move to adapt to market challenges, National Tyre Services (NTS) has shifted its focus to personal selling following the closure of four retail outlets at the beginning of the financial year 2024.
This decision aimed to streamline operations and concentrate resources more effectively, but it also resulted in a significant impact on operating profit, contributing to an operating loss of ZWL 25.9 billion down from a profit of ZWL 9.5 billion in the prior year.
"Although the Company closed four retail outlets at the beginning of the Financial Year, National Tyre Services managed to maintain a strong presence in affected areas through personal selling," chairperson Rutenhuro Moyo said in a statement accompanying the financials for the year ended 31 March 2024.
With the closure of retail outlets, the company faced challenges in maintaining customer interactions and sales volume. To counteract this, NTS emphasized personal selling as a way to connect directly with customers and promote its products.
While this approach has the potential to foster loyalty and drive sales, it often requires significant investment in training and resources, which may have contributed to the overall rise in operational costs.
Despite this operating loss, NTS achieved a remarkable profit after tax of ZWL 91 billion, a notable recovery from a loss of ZWL 17 billion during the same period last year.
The turnaround in profit was largely attributed to strategic procurement of market-driven premium tyres, which led to a 24% increase in new tyre sales volumes.
Additionally, NTS experienced success in its retreading operations, retaining a loyal customer base by improving turnaround times and offering unmatched workmanship, resulting in a 10% increase in retreading sales volumes from April 2023 to March 2024.
Meanwhile, sales growth surged by 95%, reaching ZWL 259.669 billion, up from ZWL 133.291 billion in 2023, while gross profit increased by 39% to ZWL 105.314 billion compared to ZWL 75.752 billion the previous year.
However, total operating expenses spiked to ZWL 114.067 billion from ZWL 66.775 billion, leading to a pre-tax loss of ZWL 39.276 billion, an increase from a loss of ZWL 7.253 billion in the prior year.
The profit margin stood at 35%, indicating that while NTS is generating substantial revenue, the operating loss suggests that costs are significantly impacting overall profitability.
This profit margin however, is generally strong in the automotive industry, yet the operating loss highlights underlying issues with operational efficiency and cost management.
To pilot the competitive landscape in Zimbabwe's tyre industry, NTS must enhance its unique selling propositions, such as superior customer service and high-quality products.
Strengthening marketing efforts, particularly through digital strategies, will be crucial for increasing brand awareness and reaching potential customers, especially in areas where retail outlets have closed.
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