Company growth come from continued improvement in agriculture

TURNALL Managing Director, John Jere on Tuesday said the company’s growth this year will come from continued improvement in agriculture, improved household incomes which will drive individual home building, increased mortgage lending and the continued water and sewer reticulation programmes where Turnall is a major player and partner.

He said the growth will still be guarded by raw material cost increases, increased competition and cash flow constraints. Turnall’s strategy will be to grow export and pipe sales whilst taking a larger share of mortgage based projects.

With January and February sales volumes 29% higher than the same period in December 2011 and having secured orders to supply part of the 6 500 housing unit project’s roofing materials requirements in South Africa’s KZN province, Turnall is on track to achieve export volumes of 16 000 tonnes in F12.

During the group’s December 31 2012 financial year ending, finance costs amounting to US$2,3 million on US$13,6 million debt slowed down Turnall’s profit increase despite achieving strong growth in sales volumes and revenue.

The borrowings improved from US$5,7 million in full year ending 2010 and comprised US$12,5 million short term at between 13-20% which was used to fund fibre imports and US$2,5 million being part of the PTA loan for the plant in Bulawayo.

Jere said export markets competition was mainly from local (SA) companies and also from Brazil, India and the Far East – China.

Turnall said cement remains the major raw material constituting 70% of raw material costs and its price averaged US$185/t in December 2011 and Jere expects it to trend towards the regional average of $200/t. Needless to say that the group faced an erratic cement supply in 2011 and had to bring some of it by rail from Bulawayo to Harare.

“We should admit that the NRZ was highly efficient in cement deliveries from PPC Bulawayo when Lafarge in Harare was out of cement” said Jere as he expressed his gratitude to the NRZ.

On chrysotile fibre, the major raw material for AC products, Jere said the group was really feeling the effects of the closure of the local mines through higher import prices of around US$1 300/t which is almost double the local prices of US$690-700/t.

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