Willdale still negotiating assets disposal Willdale Limited is exploring various options to enhance plant capacity in the short term

Business Reporter

Zimbabwe Stock Exchange (ZSE) listed brickmaker Willdale has issued a further cautionary statement advising shareholders that the firm is still engaged in discussions to dispose of some of its idle assets.

“Further to a Cautionary Statement published on August 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,” Willdale said.

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 of its operations, buying new equipment and upgrading laboratories.

The company budgeted about US$1 million for capital expenditure in 2021 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 an inflation-adjusted profit after tax of $4,3 billion for its financial year ended 30 September 2022, which is a 537 percent rise from the previous year.

Fair value gains of $1,6 billion and monetary gains of $4,1 billion contributed significantly to the company’s performance during the period.

Operating profit was down 137 percent to a loss of $357 million, as the company reported net exchange losses of $66 million.

Operating expenses increased by 49 percent in inflation-adjusted terms, while the operating expenses to revenue ratio increased to 25 percent from 18 percent in the previous year.

Gross profits fell by 41 percent to $1 billion, with the gross profit margin declining to 20 percent from 36 percent in the previous year.

Total revenue for the year increased by 9 percent to $5,1 billion, while sales volumes fell by 9 percent due to production constraints caused by power supply challenges and late rains.

Looking ahead, the company expressed confidence in the ongoing government efforts to stabilise the economy.

The company expressed optimism that ongoing housing development and infrastructure projects will support demand for its products.

“Although average prices have been affected by exchange rate disparities, product mix remains favourable and this is expected to buttress margins for the full year,” reads the update.

It said the recent tightening of lending terms and conditions by the central bank presents challenges in raising working capital.

“However, the business model in place is generating sufficient working capital to support the business in the short term.”

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