Turnall needs $5 million capital injection

Listed building materials producer Turnall Holdings sales, revenue and profits are ahead of last year but needs more than $5 million to recapitalise, managing director Caleb Musodza said on Friday.

Turnall Holdings loss widened to $11.9 million in the full year to December from $4.3 million previously on weakening sales and poor export performance.

Last year, revenue fell by 20 percent to $32 million while export sales contribution fell to 2.7 percent compared to four percent in the prior year but earnings in the first quarter of this year are ahead of plan.

Musodza said that an injection of $5 million into the company’s working capital would greatly improve and quicken the pace of recovery.

“Our turnaround strategies are focused on addressing procurement deficiencies, production efficiencies, business diversification, market expansion, working capital management and cost management,” Musodza said.

“An injection of $5million into our working capital would greatly improve and quicken our pace of recovery.”

He said business performance for Turnall in the first quarter of 2015 has been positive, driven by the implementation of their turnaround strategy which commenced in Q4 2014.

“Our volumes and revenue are ahead of plan despite the change of our business model from being pre-dominantly credit to pre-dominantly cash. Our Q1 2015 has also been profitable against a traditional trend where the business made loses in the first quarter,” he said.

“The performance so far is reflective of the potential of our turnaround plan and we are very optimistic about our future.”

“Our sales performance is ahead of plan, both in tonnage and revenue. The performance is also significantly ahead of prior year. Roof covering products, particularly endurite and concrete tiles were the biggest drivers of the sales performance. Our pipe and exports sales have also picked an encouraging momentum,” he added.

He said they are optimistic that the second quarter would be better and believe they will maintain the sales momentum to drive the topline.

“Our margins will improve significantly as the procurement model on inputs gets into full swing and as our cost management solutions get rooted,” he said.

He said they are currently operating at 51 percent capacity on fibre cement and 66 percent on concrete tiles.

“We expect these to pick up as we go into our peak season which begins in August,” he added.

He said the liquidity crunch has manifested itself in high credit sales risk, and this prompted them to shift their trading model towards cash sales. Consequently, Musodza said the average order sizes have reduced but this has been compensated by a higher frequency of the orders.- The Source

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