• Turnall Holdings faced significant challenges in FY2024, including a widened net loss and declining revenue
• The company's struggles were exacerbated by Zimbabwe's economic woes, including drought and currency devaluation
• Turnall is betting on a new fibre cement sheeting plant to boost efficiency and drive revenue growth

Harare- Turnall Holdings, a Zimbabwe-based manufacturer of fibre cement roofing products, pipes, and concrete tiles, reported a widened net loss of US$2.9 million in FY2024, up from US$1.5 million the previous year, as a tough operating environment took its toll.

The company’s revenue fell 4% to US$12.04 million, down from US$12.56 million, hit by liquidity shortages and the El Niño drought that curbed demand and customer purchasing power.

This analysis explores the company’s financial struggles, Zimbabwe’s economic challenges, industry dynamics, comparisons with regional peers, and future prospects tied to a new sheeting machine.

The company faced a brutal year financially, with turnover dropping due to weakened demand for its low-income housing product customers, a direct result of Zimbabwe’s liquidity crunch and the drought’s impact on agricultural incomes.

Gross margins shrank to 19% from 23%, squeezed by rising raw material costs and a 43% devaluation of the Zimbabwe dollar in 2024, which inflated import prices for synthetic fibre that couldn’t be fully passed onto customers.

Operating expenses ballooned, pushing the expense-to-sales ratio to 48% from 35%, driven by inflation spikes and a US$1.2 million write-off for obsolete inventory like synthetic fibre and pipes, signaling supply chain woes and shifting customer tastes.

Credit losses of US$267,771 and a US$111,710 tax burden further deepened the net loss.

On a brighter note, the company turned around its cash flow, generating US$1.5 million from operations compared to a US$6.4 million outflow in 2023, due to tighter working capital controls.

But heavy spending of US$3.2 million on a new Harare plant and Bulawayo upgrades coupled with a weaker current ratio of 1.13, hints at growing financial risks.

These struggles stem from Zimbabwe’s chaotic economy. The El Niño drought, one of the worst in decades, gutted agricultural output, slashing rural demand for fibre cement products.

Tight monetary policies to prop up the Zimbabwe Gold choked liquidity, stifling consumer spending and investment, while the currency’s steep devaluation jacked up import costs and threw pricing strategies into disarray.

Inflation surges in early and late 2024, alongside taxes and a shaky credit environment, hit operating costs hard.

The construction sector, Turnall Holdings’ bread and butter, slumped under low demand, delayed government projects, and foreign currency shortages, piling on the pressure.

The fibre cement industry isn’t helping either. While prized globally for durability and affordability in low-income housing, the sector faces heat over asbestos health risks, a legacy issue for the company, even as it shifts to non-asbestos NuTech products.

High costs for imported synthetic fibre, worsened by global supply chain snags, and local cement shortages, Turnall consumes 10% of Zimbabwe’s supply—hamper production.

Customers are turning to modern options like metal roofing and PVC pipes, leaving traditional fibre cement in the dust, as shown by that hefty inventory write-off.

Competition is fierce too, with regional players leveraging scale and diversification to undercut prices in a market with low switching costs. Zimbabwe’s infrastructure gap could be a boon, but political instability and tender delays keep growth in check, and the company’s capital-intensive bets amid losses raise debt worries.

Looking forward, the company is betting big on a new fibre cement sheeting plant in Harare, due in Q1 2025, and Bulawayo upgrades by Q2, fueled by US$3.2 million in spending.

The goal? Boost efficiency, cut costs, and lift NuTech quality for export markets like South Africa and Zambia, aiming for revenue and margin gains. But it’s a risky play. Zimbabwe’s shaky infrastructure could delay rollouts, and breaking into export markets means battling giants like Marley Roofing with top-tier standards—demanding more cash the company may not have.

Economic headwinds like currency swings and inflation, plus El Niño’s lingering effects into 2025, loom large. Sticking to fibre cement, a fading global category, limits the outlook, despite small steps into plastic pipes.

In the end, Turnall Holdings’ FY2024 paints a grim picture: a business hammered by drought, currency turmoil, and inflation, worsened by slow innovation and supply chain stumbles. The new sheeting machine offers hope, but only if execution is flawless, exports take off, and Zimbabwe’s economy steadies tall orders all.

Recovery demands a faster non-asbestos shift, leaner supply chains, digital sales, and bold diversification, plus governance fixes.

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