LOW disposable income, high unemployment levels coupled with subdued economic growth affected building and piping products manufacturer Turnall Holdings (THL)’s financial performance for the year ending December 2013.
The Zimbabwe Stock Exchange-listed manufacturing concern chairman Herbert Nkala said clients shifted their focus from construction and sewer and water reticulation projects were put on hold due to funding constrains.
The company’s revenue base marginally increased by 1% in the period under review from $42,5 to $42,9 million.
“For Turnall Holdings, demand for building products remained lower than expected due to low disposable income in target market segments as unemployment levels continued to increase. This was worsened by a drought season which saw consumers shifting their priorities from construction.
“As has been the case over the past few years, projects lined up for both sewer and water reticulation did not materialise as a result of funding limitation, despite the company having received inquiries and ,” Nkala said.
Stakeholders in the construction industry have raised concern over the depressed performance, but are pinning their hopes on making available mortgage finance by financial institutions to boost their operational capacity to at least 60%.
The construction industry has been experiencing financial constraints, hence low activity. Nkala said exports to South Africa were affected by price volatility due to the free fall of the rand. However, exports grew from $1 million to $1,7 million.
He said the firm continues to import chrysolite fibre from Brazil.
The firm’s gross profit was 24% compared to 29% in 2012 with an operating profit margin of 0,29% compared to 10% for the same period last year. Nkala said a negative net profit margin of 7% was achieved against a positive 2,85% for the previous year.
Operating profit was $0,124 million compared to $4,32 million.