Brick maker Willdale Limited has seen turnover for the full-year to 31 March 2016 come in 20 percent below prior year at $3.6 million due to an 18 percent decline in volumes and lower prices.
Company chairman Alex Jongwe said although there was no increase in unit production costs, the achieved gross margin declined to 26 percent compared to 29 percent in the prior year.
As a result, an operating profit of $218 383 was earned compared to $468 164 in the same period in 2015 after charging $395 146 in depreciation of property, plant and equipment.
Jongwe said several projects for housing, universities and school development remain at quotation stage. The company has sufficient production capacity to meet demand, he added.
“The continued improvement in availability of mortgage finance has kept the order book from individual home developers active. In view of the need to improve product delivery to customers, a delivery service will be introduced in the third quarter,” he said in a statement accompanying the results.
Overhead costs for the period declined by 10 percent while net financing costs, including costs of preference shares, were at $339 340.
The company on 10 June 2014 raised $3.255 million through the issue of 10 percent redeemable cumulative preference shares at a subscription price of $1 per share. Jongwe said the preference shares have been accounted for as a liability since they are redeemable and convertible.
In terms of operations, there was minimal extrusion and firing in the period under review in line with the strategy of not running the plant during the wet season to minimise brick loses.
Jongwe said stocks carried over from prior year were sufficient to cover sales during the period under review.
He said cost management remain key to operations in the current environment given declining selling prices.
“Various measures are in place to improve process efficiencies across operations in order to reduce both production and overhead costs. Productivity based remuneration has been introduced in most production processes.”
Going forward, Jongwe said the introduction of a brick transportation service will enhance the company’s competitiveness.- The Source