• Revenue surged by 13% despite a 34% drop in volumes
  • Cites exchange rate distortions for depressed profit margins
  • Supreme Court judgement may have a material impact on profitability

Zimbabwe Stock Exchange (ZSE) listed manufacturer and supplier of roofing and building materials, Turnall Holdings, recorded a 13% increase in revenue in inflation-adjusted terms and a 282% surge in historical terms for the third quarter ended 30 September 2022. This was however on the back of a 34% drop in traded volumes which was a result of changes in the sales mix by the company which skewed towards the high value and low tonnage building materials. The company further highlighted that the decline in volumes was further worsened by the prevailing liquidity challenges which has resulted in depressed aggregate demand.

The Group’s profit margins remained under pressure during the period under review due to increased cost of operations. In addition, exchange rate distortions had adverse effects on the company’s pricing power for the third quarter ended September. “A business decision was made to build adequate stocks in preparation for the peak period. The Group continued to engage suppliers for better terms and prices, pursued its cost containment initiatives and restructured the business in line with its strategy”, said the company.

The depressed company’s profit margins may further be affected in the second half of FY22 as the Group hinted that an adverse judgement delivered by the Supreme Court may have a material impact on the profitability of the company. “On 28 October 2022, the Supreme Court made an adverse judgement against the company in a legal case involving a former executive of the company. By way of a brief overview, the case involved a claim for unpaid terminal benefits”, said the Group.

Production from the Harare fibre cement plant, which is currently under refurbishment, is expected to commence in the second quarter of 2023. This positive development will result in considerable cost containment measures coupled with increased product availability in the Northern region. The Group further hinted that it is supplying various materials to government ongoing projects.

“The group is also going to resume the production of Inverted Box Rib (IBR) roofing sheets which will commence in the fourth quarter of 2022”, said the company.