By ETimes
Financial Performance Highlights
- ZSE listed construction materials firm Willdale Limited reported an ZWL$8.3 billion inflation adjusted after tax profit for its financial year ended 30 September 2023, a 97% rise from the previous year. Gross profits climbed 196% to ZWL$10.5 billion.
- Revenues increased by 106% to ZWL$36.9 billion. According to the Company, reduced availability of stock due to electricity shortages saw capacity utilization fall to 75% and contributed to a 5% decline in sales volumes. However, the Company noted that demand for bricks was relatively high during the year, driven by housing development, construction of educational facilities and shopping centres
- The Company highlighted the adverse impact of exchange rate distortions as exchange losses of ZWL$7.3 billion amounted to 21% of total revenues versus 2% in 2022.
- Despite that, margins were sustained by a favourable product mix as customer preference for high-margin bricks increased.
- The operation generated net cash flows of ZWL$3.6 billion, which supported investment expenditures of ZWL$2.2 billion and the overall cash flow position was a surplus of ZWL$834 million.
- The Company’s Total Assets stood at ZWL$143.2 billion, with cash holdings of ZWL$1.3 billion, inventories of ZWL$12.7 billion and receivables of ZWL$12.6 billion. Total liabilities stood at ZWL$39.1 billion, with payables of ZWL$15.7 billion and total borrowings of ZWL$915 million.
- Looking ahead, the Company highlighted the need for electricity supply to improve and expressed optimism about the opportunities presented by Zimbabwe’s construction sector. The Company will also enhance its efforts to raise funds from existing assets to finance plant upgrades.
- The group declared a dividend of USc0.0056.
On paper it looks a fair performance from Willdale. The Company’s Gross Profit Margin and Operating Expenses to Revenue ratios suggest that pricing and cost management were effective against the inflationary environment and reduced capacity utilization. The Company’s operations were also cash flow positive, which was sufficient to finance its capital expenditures and spared it from incurring any expensive short-term debt. So the main concern lies in the Company’s low levels of liquidity, and the apparent need for some semi-intensive capital investments. Beyond that, the general operating environment still presents significant risk, as the the energy supply situation remains unstable and the increased dollarization could put a squeeze on aggregate demand.
On the ZSE, in the last twelve months the Willdale share has gained 1,571% in nominal terms and 22% in implied USD terms. The share is currently trading at a Price to Book ratio of 0.51x.