eBusiness Weekly
Tapiwanashe Mangwiro
Listed brick maker, Willdale, has issued a further cautionary statement advising shareholders that the firm wants to dispose of certain idle assets.
“Further to a Cautionary Statement published on December 3, 2022, the directors would like to advise shareholders and the general public that negotiations for the disposal of certain idle assets, whose outcome could have a material effect on the business and the share price, are still in progress,” the statement reads.
In 2017, the company disposed of part of its land for US$11 million, with the proceeds utilised towards servicing debt and settling preference shares obligations.
Over the years, Willdale has been focusing on the production side, buying new equipment and upgrading laboratories.
The company budgeted about US$1 million in capital expenditure to refurbish and renew parts of fixed and mobile plants. This was part of its efforts to enhance efficiency and quality. “Plant capacity utilisation, which is currently averaging above 80 percent, should provide sufficient stocks to meet targeted sales volumes for the ensuing quarter, provided electricity supply remains reasonable,” the company said in June 2022.
The listed brick manufacturer reported that sales declined 2 percent in the first quarter to December weighed down by slowing demand.
Low product uptake, brought on by a lack of liquidity, was blamed for the volume reduction.
“The measures ushered in by the monetary authorities at the beginning of the quarter brought some stability to the exchange rate and inflation,” said the company in a trading update.
“However, the resultant liquidity shortages led to depressed orders.”
According to the company, the amount of production throughout the quarter decreased in line with the working capital on hand.
“The scheduled maintenance programme has progressed well and the plant is expected to meet targeted efficiencies during the coming peak production season,” it said.
“Demand for bricks remains high for various projects such as housing developments, schools and shopping malls.”
Inflation adjusted revenue for the quarter was 36 percent above the prior year.
“Average prices remained firm, sustained by a favourable product mix, while management remains focused on cost management,” the company said.
“Low stock availability resulting from the seasonal nature of the production cycle, will affect profitability in the ensuing quarter.”
To handle the dynamic economic climate, the company said short-term company plans are still being evaluated.
“Several projects are planned for the foreseeable future and will provide the critical mass for the business,” it said.
ZIMRA has raised claims for output VAT on bricks on the basis that the company zero-rated bricks without supporting legislation, according to the company.
“However, the company and other industry players have objected to ZIMRA’s interpretation of the law and the matter is pending.”
It said that using borrowings to fund the business is no longer viable due to excessive borrowing rates.
