- Monetary loss widened to half a billion
- Sales volumes declined by 16%
- However, the company remained profitable
Harare- Willdale Limited Zimbabwe, a bricks maker company listed on the Zimbabwe Stock Exchange (ZSE), has reported a net monetary loss of ZWL 562.78 million for the half-year ended March 31, 2023.This can be lessened through adopting several solutions written in this article including leveraging on technology.
This is a testament to the company's resilience and economic fortitude in the face of currency conundrums and exchange rate volatility that took a significant toll during the period. The loss has resulted in a decline in profit after tax from ZWL 142 million in the same period last year to ZWL 134 million this year.
The company's expenses have skyrocketed to ZWL 1.1 billion in administration expenses, selling, and distribution expenses, as inflationary pressures eroded the value of the Zimbabwe dollar. This has led to a significant decline in the company's sales volumes by 16%, despite high demand for bricks to support various housing projects in the country. This can be attributed to the national grid failure, which has resulted in intermittent power supplies.
The extruders, which are a type of brick that consumes more energy, were mostly affected by power deficits, leading to a 34% decline in output. This has hampered production and resulted in a significant reduction in the company's revenue efficacy.
The extruders' decline in production efficiency can be linked to the electricity load shedding that mostly affected these heavy consumers of the energy source. The impact of electricity load shedding on the company's revenue underscores the challenges that Zimbabwean companies face amidst the country's persistent economic challenges.
However, Willdale has to take care of monetary losses to increase profitability and boost investor confidence.
The company needs to develop a comprehensive financial plan that takes into account the company's revenue projections, expenses, and cash flows. This helps a company avoid net monetary losses. A well-prepared financial plan can help a company identify potential risks and opportunities and create strategies to mitigate risks and capture opportunities, especially in Zimbabwe where the Zimbabwe dollar volatility is an obvious naked truth.
The other key when operating in an inflationary environment to alleviate monetary loss is efficient cost management. The company’s costs peaked to a billon with less than ZWL150 million in profit. Willdale can manage their expenses by cutting down on unnecessary costs and optimising their operations to reduce overheads. This can be achieved through measures such as improving supply chain management, reducing energy consumption, and streamlining administrative processes.
Willdale should also consider reducing its reliance on a single source of revenue by diversifying products or services. This can help them tap into new markets and reduce the risk of revenue decline due to economic or market changes. Diversification has worked well for big names like EcoCash Holdings, Padenga Holdings and TSL Limited.
Leveraging on technology
The last but prominent and key solution that the company needs to consider is investing in technology. It can leverage technology to improve its operations and address some of the challenges it faces, including the high cost of production and intermittent power supplies.
Willdale can automate some of its production processes, such as mixing, moulding, and baking bricks. This can help reduce labour costs, improve efficiency, and increase production rates. With increased production at lower costs, it means a spike in production and profitability.
To outpace the energy crisis, the company can adopt energy-efficient machinery and equipment, use renewable energy sources such as solar power, and implement energy management systems to optimize its energy use. This can help reduce its energy costs and mitigate the impact of intermittent power supplies, thus improving profitability.
Another way Willdale can use to reduce costs is the adoption of digitalisation. Willdale can use digital technologies to manage its operations, such as using software to track inventory, orders, and production processes. This can help optimise its operations, reduce errors, and improve efficiency.
Thus, technology can help Willdale improve its efficiency, reduce costs, and enhance the quality of its products, while also engaging with customers and staying competitive in the market.
