Turnall profit up as shift to high value products pays off

THE shift to a sales mix which favoured high value and low tonnage products seem to be paying off for building material manufacturer, Turnall Holdings Limited with financial results showing it posted a $2,6 billion turnover, which is a 38 percent growth compared to the previous year.

In a statement accompanying its financial results for the year ended 30 June 2022, Turnall Holdings board chairman Mr Bothwell Nyajeka said the operating environment has been challenging during the period under review characterised by shortage of foreign currency, inflation and disruption of global supply by the Russo-Ukrainian war.

“The company posted a turnover of $2,6 billion in inflation adjusted terms, which is a 38 percent growth compared to the prior year. In historical terms, turnover was $1,8 billion, which represented a 194 percent growth over the same comparable period,” he said.

“Sales volumes declined by 29 percent compared to the same period last year due to a change in the sales mix, which favoured high value and low tonnage products.”

Mr Nyajeka said sales were negatively affected by liquidity constraints and subdued aggregate demand.

He said the company’s production volumes dropped by 21 percent compared to the previous year and this was a deliberate move by management in order to align production to the sales demand.

“The gross profit margin for the year in inflation adjusted terms was 51 percent against the same period last year of 24 percent, whilst in historical terms it was 58 percent compared to 36 percent in the prior year,” he said.

“The improved gross profit margin is attributed to improved production efficiencies, cost containment strategies and a change in the sales mix.”

The company also recorded an operating cost of turnover of 23 percent compared to 20 percent recorded the prior year and the increase is attributed to general price increase experienced in the country.

“The profit before tax in inflation adjusted terms was $672,5 million compared to $133,9 million recorded for the comparable period last year, which was a 402 percent increase. In historical terms, profit was $675,3 million compared to $104 million which was a 549 percent increase,” said Mr Nyajeka.

“This was mainly due to the notable improvements in the turnover value, gross margins and cost containment initiatives employed by management throughout this period.”

In terms of the sustainability performance, he said they continue to apply an integrated approach in managing opportunities.

“While, the company adopted the Global Reporting Initiatives (GRI) Sustainability Reporting Framework as a business model in addressing and managing economic, environmental, social and governance aspects of our operations,” he said.

Mr Nyajeka said management was optimistic that the business will continue to be profitable and maximise shareholders’ wealth.

“Key focus areas are to re-capitalise the plants, improve production efficiencies, improve our product offering and reduce production costs. Cost containment and business rightsizing will remain top priorities to enhance profitability. Management is resuscitating the fibre-cement plant in Harare in order to increase production capacity,” he said.

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