National Tyre Service Battles Currency Woes, Aims ...

National Tyre Service Battles Currency Woes, Aims for Recovery

Audrey Galawu

Zimbabwe’s National Tyre Service grappled with a turbulent first half of its financial year, citing volatile exchange rates, foreign currency shortages, and power outages as major obstacles. Despite these challenges, the company managed to achieve sales volume growth, although profitability was significantly impacted.

The report, released on Friday, highlighted a staggering 488% movement in exchange rates during the first six months, which significantly affected operations.

NTS’s chairman acknowledged the challenges posed by exchange rate instability and limited access to foreign currency, attributing them to a ZWL$7.9 billion pre-tax loss compared to the previous year’s ZWL$1.8 billion.

In addition to currency woes, constant power cuts were identified as another major hurdle. These outages resulted in a 14% decrease in retreading units compared to the same period last year. However, the company managed to retain key retreading transport fleets across the country, ensuring some level of operational continuity.

Despite the challenges, NTS remains optimistic about the second half of the year. The company is implementing cost-cutting measures and focusing on procuring stocks for the upcoming high season to capitalise on increased demand.

Government interventions aimed at stabilising the exchange rate and controlling inflation are also seen as positive signs. Furthermore, the chairman expressed confidence in the government’s investment and attitude towards agriculture, believing it will improve productivity and generate much-needed foreign currency for other sectors.

While profitability suffered, NTS did achieve a 13% increase in sales volume compared to the first half of the previous year, attributed to improved stock supply. Sales revenue surged by 135% to ZWL$15.3 billion, and operating profit increased by 319% to ZWL$3.1 billion.

However, the board opted not to declare any dividends, prioritising maintaining adequate stock levels and ensuring long-term sustainability in the face of a fluid economic environment.