The Sunday News
Judith Phiri, Business Reporter
BUILDING and construction materials manufacturer, Turnall Holdings Limited has come up with alternative arrangements that will ensure they have continuous supply of asbestos fibre, one of its key raw materials.
This comes after the company’s supply was affected by the war in Ukraine as the stock-outs are normally obtained from Russia and this had a major impact on their business. In a statement accompanying the trading update for the half-year ended 30 June 2023, Turnall Holdings board chairman, Grenville Hampshire said the alternatives began to operate fully in September.
“Disruption to the supply of asbestos fibre caused by the war in Ukraine has had a major impact on the business, but from September 2023 onwards, alternative arrangements will come on stream. Lead times of over nine months for key equipment required to address quality and production problems added to the headwinds experienced during the first-half of the year, headwinds which are not to abate until the fourth quarter of 2023,” he said.
He said the company started on a major restructuring and recovery plan in the first quarter of 2023 and the first key element of the restructuring was focused on Turnall’s core business of roof sheeting. Mr Hampshire said action was taken to address quality issues and manufacturing efficiency at the Bulawayo plant and to begin a large investment to reinstate manufacturing at the Harare factory, providing the much-needed capacity and critical mass. He said the additional capacity will come on stream in the third quarter of 2024.
“Due to the manufacturing constraints mentioned above, the company was not able to meet demand and although the Bulawayo factory will be operating at full capacity from September 2023 onwards, it is anticipated that sales demand will continue to exceed production capacity until the new machine in Harare comes on stream.”
He said a significant investment was also focused on Turnall’s roofing tile business which represents approximately 15 percent of group turnover, while the investment which is targeted on improving quality, output and manufacturing efficiency will start to yield results in the fourth quarter of 2023.
In terms of financial performance, Hampshire said the group’s turnover for the half-year was ZWL$18 billion in inflation-adjusted terms compared to ZWL$12,7 billion in the previous year same period, representing a 41 percent growth despite a 6 percent reduction in sales volumes.
In historical terms, revenue was ZWL$11,4 billion which was a 547 percent growth from last year, while the sales performance was mainly driven by a deliberate move to focus on the high value but low tonnage products.
He said the cost of goods sold went up by 122 percent and revenue grew by 41 percent.
Going forward, Hampshire said despite the challenges experienced in the first half of 2023, the board and management were confident that the recovery is on track.
“With the improved fibre supply in the second-half of the year, re-capitalisation initiatives, continued cost containment initiatives, enhancement of production efficiencies and the improved product offering, the group is geared for material improvements in its performance. The focus now is on delivering on re-capitalising the plants with the main projects being to purchase a new fibre cement sheeting plant for Harare, upgrading key elements of the Bulawayo sheeting machine and in establishing a presence in the glass reinforced plastic (GRP) market leading to the installation of a GRP pipe manufacturing facility in Zimbabwe.”
He said the anticipated benefits will include improved product offering, increased production capacities and efficiencies, better quality products, increased uptake from customers and the resumption of export sales.
Hampshire said the directors have resolved that there will not be any dividend declared in respect of the half-year under review due to the major projects that the group is undertaking in an effort to retool the factories.
