• Fired brick production increased 44% during the June quarter and extrusion volumes rose 11%, while sales volumes still declined 4%
• Capacity utilisation remains around 35%, with management targeting at least 70% as additional working capital becomes available
• Land sales at Haydon Industrial Park and planned developments at Haydon Phase 2, Tenerife and Smartsuburb are being used to supplement internally generated cash

Harare- Willdale Limited, the country’s only listed brick maker has increased fired brick production by 44% during the quarter ended June 2026 and still sold 4% fewer bricks, exposing a working capital constraint that is preventing the company from fully participating in Zimbabwe’s current construction cycle.

The company says demand for bricks remained strong across housing, cluster developments, commercial projects and educational facilities during the quarter. Plant availability was satisfactory, and extrusion volumes increased 11%.

Sales declined because available stocks were not enough to meet orders, and that single point isolates Willdale’s immediate operating constraint. The company is not facing a demand problem, nor is it reporting any major plant availability issues, the constraint is financing. Willdale needs working capital to fund clay extraction, production, energy, labour, stockholding and distribution at volumes that allow the plant to respond to demand already sitting in the market.

Management currently estimates capacity utilisation at only 35% and wants to lift that to at least 70%, which effectively means doubling the amount of production being run through the plant. If the funding can be secured to support that additional throughput, the commercial opportunity is considerable.

The June numbers provide a material improvement from the first half of the financial year. During the six months ended March 2026, Willdale’s sales volumes fell 50% and revenue declined 27% to US$2.28 million as working capital shortages restricted production. The company recorded an operating loss of US$1.58 million, compared with US$1.79 million in the preceding comparative period.

The June quarter marked a clear shift in production. Extrusion rose 11% and fired output jumped 44%, while sales volumes were just 4% below the prior year and revenue edged up 1%. That suggests the operating recovery is beginning to reverse the earlier contraction. The gap between production and sales also explains why the turnaround is still incomplete.

A 44% increase in fired production did not translate into similar sales growth because stock availability was still not enough to meet demand during the quarter. Some of that higher output should flow through in coming periods as finished bricks build into inventory, and management notes that improved working capital in the fourth quarter has already supported higher production. The final quarter will now show whether this production recovery can actually reach customers.

The company also lifted average selling prices by 8% in the quarter, taking year-to-date prices 16% above the prior year in line with its targeted sales mix. Pricing therefore helped support revenue at a time when physical volumes were still constrained, with quarterly sales down 4% but revenue up 1%. The relationship shows that price and product mix are cushioning the financial impact of weaker volumes, but that approach has clear limits. Brick manufacturing carries heavy fixed infrastructure and production costs, and sustainable earnings improvement depends on moving more tonnes through the plant and selling more bricks across that installed cost base.

Price increases cannot make up for capacity utilisation sitting at 35%. The bigger opportunity is in raising throughput, because moving from 35% to 70% utilisation would give Willdale significantly more output over which to spread fixed manufacturing costs. How much value that extra production creates will depend on the company’s ability to  maintain adequate gross contribution per brick as competition intensifies.

Additional brick manufacturers have entered the market, and that has sharpened the urgency around Willdale’s working capital challenge. Industry demand can hold up and the company can still cede share if competitors have bricks on hand when customers need them. Brick availability carries particular weight in construction, where project schedules leave little room for delays, and a supplier that fails to deliver once can lose both the current order and repeat business.

Willdale is operating in a market where the cost of delayed production is therefore larger than the lost tonne. With utilisation stuck at 35%, manufacturing assets are underused at a time when new players are targeting available demand. The task now is to translate the June production recovery into dependable stock, before competitors secure customer relationships on the back of volumes Willdale cannot currently supply

Willdale’s response has shifted beyond reliance on conventional operating cash, with the company now monetising its land portfolio to inject liquidity. Industrial stand sales fell 18% from the prior quarter, but property proceeds continue to supplement cash generated from operations. Phase 1 of Haydon Industrial Park is due for completion by end-September 2026, while management is awaiting permits for Haydon Phase 2 and Tenerife that are expected to open further funding channels.

Servicing of the Smartsuburb housing development is also scheduled to start before the end of Q4. This raises a direct capital allocation question. Willdale is converting part of its land base into cash to support a manufacturing operation that currently lacks sufficient working capital. That approach creates value if the proceeds fund a temporary recovery in a viable core business, but it destroys value if property is repeatedly sold to cover recurring operating cash shortfalls. The difference will only become clear once capacity utilisation rises and the business starts generating its own cash.Land Sales Need To Produce A Manufacturing Return

The case for selling stands is strongest when every dollar released produces a measurable improvement in brick earnings. Management has set the operating target at 70% capacity utilisation, which gives shareholders a clear benchmark to judge the strategy. Property proceeds should first fund the working capital needed to move utilisation from 35% toward 70%.

From there the cycle should become self-financing: higher utilisation builds finished stock, more stock drives sales, higher sales generate operating cash, and that cash funds the working capital to sustain production. If that loop develops, land monetisation is working as bridge capital. If the brick operation is still dependent on repeated stand sales after utilisation improves, Willdale will be converting long-duration property assets into cash without fixing the underlying manufacturing economics, and the balance sheet will progressively weaken.

Working capital has constrained Willdale for several reporting periods. In the half year to March 2025 revenue fell 48% to US$3.14m as volumes declined 30% and average selling prices dropped 26%, with management citing inadequate working capital as a key limit on production. The year to September 2025 saw a further deterioration, with sales volumes down 41% and annual revenue falling sharply. The March 2026 half year then posted another 50% decline in volumes.

That pattern makes clear that working capital is a recurring constraint, and management accountability now rests on breaking it. The June quarter offers early evidence of physical progress through a 44% increase in fired production, but it does not yet prove that the financing problem has been resolved.Capacity Utilisation Is The Number That Matters Next

Management expects improved working capital to lift utilisation from 35% to at least 70%, and that should become the principal operating benchmark for Q4 and the start of the next financial year. A move toward 70% delivers three benefits: more saleable stock to meet strong construction demand, better absorption of fixed production costs across a larger brick base, and stronger ability to defend customers as new brick manufacturers enter the market. The financial payoff should show up in volume growth and operating cash generation. If utilisation rises but cash does not, the problem is likely margin or cost. If cash improves but volumes remain weak, it will mean property proceeds and pricing are still the main sources of liquidity. A durable recovery requires both.

Zimbabwe’s construction market is providing Willdale with a more supportive backdrop to attempt its turnaround. The company continues to see demand from cluster housing, commercial developments and educational infrastructure, which means the constraint is internal rather than external. That makes this an execution problem, not a cyclical demand problem. Willdale does not need to create a market for bricks, it needs to finance enough production to serve the market that already exists.

The board and management should therefore direct working capital released from stand sales toward the fastest path from 35% to commercially sustainable capacity utilisation. The threshold must be explicit: property proceeds should generate enough incremental brick contribution to restore positive operating cash flow before any more land is sold to fund recurring manufacturing needs.

The final quarter is the first test. Fired production needs to stay materially above prior year, sales volumes need to turn positive as higher output rebuilds inventory, capacity utilisation needs to move from 35% toward the 70% target, and year-to-date revenue, currently 18% below last year, needs to narrow that gap. Those metrics will show if Willdale has finally broken the working capital cycle that has limited production across multiple periods. The June quarter proved the factories can produce more. Strong construction demand proves customers can take more. The value of Haydon and the remaining land portfolio will now be determined by whether the cash released can make the brick business finance itself.

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