- Reported 16% decline in production citing load-shedding, limitations in working capital
- Sales volumes went down by 5%
- Willdale is exploring the implementation of energy-efficient technologies, cost optimization to enhance production capabilities
Harare - Leading bricks manufacturer, Willdale Limited Zimbabwe, has posted a depressed Q3 performance for the third quarter ended 30 June 2024, owing to intensive load-shedding and low working capital.
The company, which is the only bricks maker listed on the Zimbabwe Stock Exchange, has seen its production performance go down by 16% compared to the same quarter in 2023.
"Despite a good start to the production season, a combination of factors, such as electricity load-shedding and limitations in working capital, resulted in a 16% decline in production compared to the prior year," the company said in a trading update.
"Production has since been ramped up to within year-to-date targets."
As a result of low production volumes, sales volumes performance was in tandem, going down by 5%.
Zimbabwe has been bracing up for high-level load-shedding spanning over 12 hours per day due to low water levels at Kariba Dam, which is impeding electricity generation, as well as old and dilapidated infrastructure at Hwange Power Station.
The country is generating 1200 megawatts on average, against a peak demand closer to 2000 megawatts.
The government is planning to add two more units at Hwange Power Station, adding an additional 600 megawatts, but this is a plan scheduled for 2025, meaning companies have to leverage on diesel generators.
This is driving up operating costs in an economic environment dominated by informal brick makers who offer cheaper bricks as they operate outside the tax regime.
With the introduction of Zimbabwe Gold (ZiG) on 5 April, the revenue mix shifted towards the local currency in the quarter under review, and the company's focus remains on generating sufficient cash flows and managing costs.
However, in July alone, ZiG had hit a historic low of 45% on the parallel market from 36% in May before easing to around 30% in June.
Thus, the group has to intensify efforts to improve competitiveness through investment in modern plant technology, and cost containment will be critical going forward to sustain margins, faced with increasing competition.
Willdale could leverage several modern plant technologies to improve its brick production and operations in the face of the challenges it is facing.
One key area would be the implementation of energy-efficient kiln technologies, such as tunnel kilns or shuttle kilns, which can significantly reduce energy consumption and improve production efficiency during the firing process. Astral Bricks in South Africa has invested in energy-efficient tunnel kiln technology to reduce its natural gas consumption and lower its environmental footprint.
Automation and robotic systems could also be employed to streamline the manufacturing process, increase output, and minimize labor-intensive tasks.
Mozal, an aluminum smelter in Mozambique, has leveraged robotic material handling systems to automate its brick production and packaging processes, improving productivity and reducing manual labor.
Kilimanjaro Brick & Tile in Tanzania has implemented automated extrusion and cutting systems to streamline its brick manufacturing operations
Another important consideration would be the integration of digital monitoring and control systems to optimize production parameters, monitor energy usage, and enable predictive maintenance, thereby improving overall operational efficiency.
Dangote Cement, a leading cement manufacturer in Nigeria, has deployed centralized production management and data analytics platforms across its brick and concrete block plants to enhance operational efficiency
It could also explore the possibility of incorporating waste heat recovery systems to capture and reuse the heat generated during the firing process, reducing energy costs and environmental impact.
To mitigate the impact of the unreliable electricity supply, Willdale could focus on alternative fuel sources, such as biomass or renewable energy solutions like solar power, as a means of reducing reliance on the grid. Sinoma CBMI, a Chinese construction company with projects in Africa, has incorporated the use of agricultural waste and biomass as alternative fuel sources for its brick kilns in various countries.
Finally, Willdale should consider implementing supply chain optimization strategies, such as just-in-time delivery and inventory optimization, to better manage its working capital and ensure the availability of raw materials and finished products.
By leveraging these modern plant technologies, Willdale Limited can enhance its production capabilities, improve energy efficiency, and better adapt to the challenges posed by load-shedding and liquidity constraints.
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