Willdale records profit despite 5pc sales drop
ZIMBABWE Stock Exchange (ZSE) listed brick maker Willdale Limited reported an $8,3 billion profit for the 2023 financial year despite a 5 percent fall in sales, driven by a favourable product mix and high margins.
In a statement accompanying financial results Willdale said, “Reduced availability of stock due to electricity shortages saw capacity utilisation fall to 75 percent and contributed to a 5 percent decline in sales volumes”.
However, the company noted that demand for bricks was relatively high during the year, driven by housing development, construction of educational facilities and shopping centres.
During the period under review, gross profits climbed 196 percent to $10,5 billion whilst revenues increased by 106 percent to $36,9 billion.
“Despite that, margins were sustained by a favourable product mix as customer preference for high-margin bricks increased.
“The operation generated net cash flows of $3,6 billion, which supported investment expenditures of $2,2 billion and the overall cash flow position was a surplus of $834 million,” the statement read.
The company is under a cautionary statement as it is seeking to sell some of its idle assets including land.
The statement released in December 2023 says, “Further to the cautionary statement published on November 22, 2023, the directors would like to advise that negotiations for the disposal of certain immovable assets, whose outcome could have a material impact on the business and the share price, are still in progress.
“Shareholders and the general public are, therefore, advised to continue to exercise caution and to seek professional advice when dealing in the company’s shares.”
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.
To adapt to the dynamic economic climate, the company said short-term company plans were still being evaluated.
“Several projects are planned for the foreseeable future and will provide the critical mass for the business,” it stated.
The company highlighted the adverse impact of exchange rate distortions as exchange losses of $7,3 billion amounted to 21 percent of total revenues versus 2 percent in 2022.
Looking ahead, the company highlighted the need for electricity supply to improve and expressed optimism about the opportunities presented by Zimbabwe’s construction sector. Willdale will also enhance its efforts to raise funds from existing assets to finance plant upgrades.
The group declared a dividend of US0,0056 cents.