Financial results for property linked companies for the interim period ending June 30 showed that there were high demands and expectations in the sector from potential homeowners who have been fed a diet of hope for too long in the face of diminishing resources.
Turnall Holdings chairman Herbert Nkala, however, believes the country’s construction activities would increase “as authorities address the infrastructural challenges the country is facing mainly water, sewage reticulation and the construction of affordable housing units”.
Nkala said Turnall had responded well to dollarisation and to the increase in demand despite the power outages experienced during the period under review at their Bulawayo factory.
“Capacity utilisation grew, as a result from 10% at the beginning of the year to 50% by the end of the second quarter 2009,” he said.
Nkala said while dollarisation was a welcome and positive development, it had created liquidity challenges for business in general.
“Companies were faced with low capacity utilisation, inherently high operating costs emanating from historical pricing mechanism in addition to these many challenges experienced in securing funding for working capital purposes,” he said.
During the period under review, the company achieved a turnover of US$3 924 353 with exports contributing 14,2% of the turnover.
An operating profit of US$1 005 043 was posted during the period. Profit before tax of US$891 889 was achieved after charging net financing charges of US$113 154. An attributable profit of US$306 210 was achieved. Basic earnings per share were recorded at US$0,06c.
Turnall closed the reporting period with cash resources of US$406 645. Finance charges were incurred on short-term borrowing secured to find working capital.
On capital projects, Nkala said the first drawdown from the US$5 million loan secured for the non-asbestos plant capital had taken place.
“The equipment being purchased is to manufacture asbestos free products for the South African market in response to the asbestos ban that has since been promulgated in that country. The commissioning of the plant is planned for October 2010,” Nkala said.
He said sales volumes were depressed for the greater part of the first quarter. The volume trends gradually improved in the second quarter of the year due to an increase in activity levels brought about by inflows from tobacco and cotton as well as infrastructure projects.