TURNALL Holdings Limited operating profits dropped to $1,38 million in the half-year ended June 30 2013 down from the $2,4 million recorded in the same period the previous year, largely due a high fixed costs structure and low capacity utilisation.
In an unaudited financial statement yesterday, company chairman Herbert Nkala said gross profit margin was recorded at 23% and was lower than the 30% achieved last year mainly because of lower-than plan pricing during the first quarter of the year.
“Faced with a declining demand pattern and import pressure due to the weakening rand, the company came under intense pricing competitive pressure and in an effort to retain market share, margins were lowered to reflect the new reality,” Bhebhe said.
“Margins during the first quarter were as a result of lower-than plan,” he added.
Bhebhe said the operating profit margin as a result, dropped to 7% against 16% recorded in the same period last year which he said was reflecting a generally poor factory capacity utilisation.
The company generated an operating profit of $0,03 million on revenue of $18,9 million representing a margin of 0,15% compared with a net income of $1,28 million against revenue of $18,5 million.
Net finance charges were recorded at $1,34 million compared to $1,2 million recorded in the same period the previous year.
The company last year commissioned a roofing, tile and non-asbestos plant in Bulawayo and Bhebhe said the new investment was already delivering a price competitive and far more environmentally friendly roofing tiles.
Going forward, the company said the post-election era should usher in positive growth investment in infrastructure and anticipates benefiting from growth of the construction industry.
Pipes are expected to remain a key growth area for the company and any investment in sewer and reticulation will see the business benefit from increased revenue streams.
Twitter feedback @mudarikirig