HARARE – National Tyre Services (NTS) overall unit performance rose 27% in the first 5 months to August this year, underpinned by improved stock supply despite closing non-performing branches.
Chief executive Benson Samudzimu told the company’s annual general meeting that the operating environment was in a tailspin due to rapid movements in the foreign exchange, which negatively impacted operations and profitability.
“I need not overstate that foreign currency exchange rate stability is critical in business planning and I won’t dwell on it as we are well accustomed to the challenge that foreign currency volatility brings to business and personal lives,” he said.
The company was not spared from the power cuts.
“To mitigate those challenges, we have installed some new generators at selected branches and we hope that we can minimise losses due to power outages. We have also seen the recent price increases on fuel, which impact, of course, our distribution and operating costs.”
He said the company had limited foreign currency to import budget brands from China and India which affected overall performance.
“However, premium tyre sales volumes sustained the business, with year-to-date volumes increasing by 12% compared to the same period last year,” he said.
“On a sad note, the premium tyre suppliers increased prices by an average of 9%, which is unfortunate we have to pass on and does not make us very competitive. The suppliers say that the increase was driven by price increases for raw materials, freight exchange rates and other supplies.”
Our retreading volumes fell by 26% when compared to last year.
“Again, they were affected by acute power outages,” he said.
“Tubes and services category increased by 38%, driven by stock availability and improved power supply towards the end, even in the middle of the season.”
In the outlook, he said the company is going to focus on cost containment measures.
“Our focus at the moment is going to be on rationalising the business, cutting costs and reviewing our various branch operations with a view to hive out those branches that are not profitable,” he said.
It closed four smaller branches due to “volume performance issues and locational challenges.