eBusiness Weekly
Nqobile Bhebhe
Turnall Holdings Limited, a Zimbabwe Stock Exchange (ZSE) listed construction products manufacturer, is making significant investments to enhance its manufacturing capacity and production efficiencies at its Bulawayo plant with a focus on the production of new tech fibre cement sheeting primarily for the export market.
The Bulawayo plant is set to take delivery of US$2 million worth of spares and equipment set to be delivered in Bulawayo for purposes of upgrading the facilities.
The firm is eyeing a return to the regional export market, therefore modernisation of its factories is critical in the production of high-quality products that will compete favourably in the market.
The listed roofing and plumbing material manufacturer, has plants in Bulawayo and Harare. By modernising its factories and expanding production capabilities, Turnall aims to position itself competitively in the construction materials industry, both locally and regionally.
Board chairman, Grenville Hampshire, said in the company financials for the year ended December 31, 2023 that the firm is committed to the implementation of an ambitious recovery plan that involves the introduction of a new modern production line in Harare for roofing sheets and flat products, extensive modifications to the Bulawayo sheeting plant and a major investment in new templates and spares aimed at reducing costs and increasing output from the Harare concrete tile plant.
“Maintaining high standards of product quality remains a key priority and this will be underpinned when spares and equipment with a value of over United States Dollars (USD) 2 million start to arrive in Bulawayo in second Quarter of 2024,” he said.
“The Group is also committed to returning to the regional export market and a significant investment in new equipment to convert the Bulawayo sheeting plant to “NuTech” production for the export market will come on stream in Quarter two 2025, following the commissioning of the new sheeting plant in Harare in Quarter 1 2025.”
Turnall is engaged in the production of building and construction materials comprising corrugated sheeting, flat sheets, pan tiles, pressure pipes, sewer pipes, concrete roofing tiles and related accessories.
The company operates through segments, which include building products, piping products and concrete tiles.
It offers products, including garden decor, partition boards, barges, fascia, pantiles, slate and endurites.
Additionally, its product line also includes Ravenna concrete tile, Nutech non asbestos sheets and Turnall Spanish pavers.
Hampshire noted that the group recently recommissioned the fibre cement pipe plant in Bulawayo due to an increase in demand and is also expected to place an order for a Glass Reinforced Plastic (GRP) pipe machine this year.
He indicated that GRP pipes are now the preferred product for large-diameter water pipes and the Group is focused on being able to supply pipes to support the large number of infrastructure renewal projects in Zimbabwe and the region.
The group’s turnover for the year was $84,2 billion in inflation-adjusted terms compared to $40,3 billion achieved in the prior year, representing an increase of 109 percent.
In historical terms, revenue was $54,5 billion representing an 834 percent growth over last year.
Hampshire said the improved performance was mainly due to an increase in concrete product sales and also furnish modifications which enabled the group to maximise on the available raw materials for the fibre-cement products.
However, the Group was unable to meet sales demand on the fibre-cement products due to the fibre supply disruptions.
The inflation-adjusted gross margin for the year under review was 45 percent compared to 31 percent achieved last year. In historical terms, the gross margin was 49 percent compared to 50 percent reported in the prior year.
He added that the improvement in the gross margin in inflation-adjusted terms, is attributed to the timeous review of selling prices in line with inflation and the tight cost containment initiatives being implemented by management.
He noted that management will continue to manage costs and ensure that the business remains competitive and profitable.
The inflation-adjusted operating expenses to sales ratio was 41 percent compared to 52 percent in the prior year and in historical terms was 31 percent compared to 60 percent recorded last year.
“The reduction is attributed to cost containment initiatives being implemented by management. In addition, in the prior year, the business had some unusual expenses such as the provision of terminal benefits for the former executives and impairment of some of the old equipment.”
The Group incurred an exchange loss amounting to $26,4 billion (historical $17,1 billion) due to the sharp increases in the exchange rates during the year and this impacted negatively on the Group’s performance.
A total of $9,3 billion in historical terms arose from the outstanding terminal benefits for the former executives. In the period under review, Mr Hampshire said a total of $35,7 billion was paid towards the recapitalisation of the plants which will be installed in the next two years and are included in prepayments.
The capital projects were funded through a shareholders’ rights issue.
Based on the financials, a total of $39,5 billion, in historical terms, was raised through a shareholders rights issue during the year and the funds were used for the acquisition of a new sheeting plant and a Glass Reinforced Plastic (GRP) Pipe Plant.
The rights issue in inflation-adjusted terms amounted to $60,9 billion. The Group is embarking on a massive expansion drive to grow the revenue base and improve profitability.
To that end, a total of $24,8 billion was invested in inventories, with the bulk of that going towards the purchase of fibre as the business made a deliberate decision to acquire adequate fibre as a mitigation measure against the long lead times.
Capital expenditure for the year was $2,9 billion with the focus being mainly on improving production efficiencies.
