Brick manufacturer Willdale is optimistic that the company will benefit from the current housing development boom as well as the need for institutional and infrastructure development.
Chairman Alex Jongwe, said the board’s confidence that the company will continue to operate as a going concern for the foreseeable future, is based on the successful implementation of its strategic plans that include investment in property as a hedge against inflation, continued support from current financiers and suppliers and other initiatives that are being undertaken to improve performance.
“The board is also encouraged by optimism in the construction industry that is driven by the current housing deficit of about 1,5 million units in the country. Demand for bricks for these projects will keep our order book full,” Mr Jongwe said in the company’s results for the year to September 30.
“Investment in property as a hedge against inflation is also expected to spur demand and our confidence of the future is therefore high. We will continue to focus on initiatives that grow margins. We will also consider alternative ways to source imported spares to support plant capacity availability,” Mr Jongwe said.
In terms of production, the company said green and fired production volumes increased by 30 percent and 58 percent respectively despite the delayed plant. Capacity utilisation grew by 5 percent to 60 percent. Financially, Willdale reported a massive upsurge in after tax profit to $304 906, up from $32 125. However, the company said, profitability remains weighed down by interest expenses of $800 000.
Revenue for the period grew 26 percent to $9,7 million compared to prior year, driven by a 23 percent jump in sales volumes driven by individual home owners, cluster homes and schools as well as a 3 percent increase in average prices.
Net cash flows from operations also went up by $600 000. Capital expenditure for the year amounted to $300 000 and was financed through cash flows from operations. Borrowings closed the year at $7,1 million, up from $6,9 million.
Willdale said the borrowings consist of a five year loan overdraft for $2,6 million, from $2,7 million prior year secured by a mortgage bond of $5,7 million. The company leased assets under a three year finance lease, which in turn were sub-leased to a joint venture under similar terms as the head lease.