Power outages, inflation affecting Willdale progre...

Power outages, inflation affecting Willdale progress

Nyashadzashe Ndoro

Brickmaker, Willdale Limited, says production declined by 16% because of electricity load-shedding leading to sales volumes dropping by 9% in 2023 compared to the prior year.

In its trading update for quarter ended 31 December 2023, the Zimbabwe Stock Exchange listed company the major economic factors remained volatile with the inflation rate increasing steadily from a month-on-month rate of 1% in September to 4.7% in December.

“The Zimbabwe dollar shed 12% against the United States dollar in the same period putting pressure on costs and margins. Significant activity was witnessed in the construction industry. Increased load shedding was experienced, affecting. throughput and efficiencies,” the company secretary Mavuto Munginga said.

“Production declined by 16% because of electricity load shedding. As a result, sales volumes dropped by 9% compared to the prior year. Demand for bricks remained high though, driven largely by construction of cluster homes in urban areas.”

On financial performance, Willdale’s revenue for the quarter increased by 130% in hyperinflation terms and by 835% in historical terms compared to the prior year.

Munginga, however, highlighted that revenue continued to be impacted by exchange rate distortions.

“The company is considering a change in functional currency to the United States dollar in view of the increased ratio of transactions conducted in US dollars. This initiative, which will only be adopted, at the beginning of the new financial year, is expected to deal with reporting distortions emanating from multi-currency transacting.

“Building projects have continued to increase into Q2 with cluster home development, educational infrastructure and shopping centres dominating the list of projects. These should provide the critical mass to meet set targets for the year. The ongoing initiative to unlock value from certain assets should provide resources to increase capacity, competitiveness and profitability,” he said.

The company vowed to intensify engagements with the Zimbabwe Electricity Supply Authority to lobby for more energy supply.

“We will continue to engage Zesa to improve electricity supply to the operations,” Munginga added.

“The taxation measures introduced for the year 2024 which include the reclassification of clay bricks as liable to VAT, will impact on business in the short term, especially from price sensitive customers who are not VAT registered and cannot recover input tax.”