National Tyre Services (NTS) says it is working on a restocking program to cater for the forthcoming busy season after receiving a US dollar facility from its bank.
The business focuses on selling and retreading tires for cars, light trucks, heavy trucks, earthmoving equipment, mining equipment, and industrial vehicles. Most of the company’s operations are supported by imports from China, Japan, and Africa.
Managing director Benson Samudzimu told shareholders at the company’s annual general meeting that they remain hopeful that the actions being taken by the government and the central bank will stabilize the local currency and increase market confidence moving forward.
“However, there is always a fear of instability coming back, and one gets a déjà vu feeling that we have walked this road before. So we need prolonged periods of stability to give us sufficient recovery,” he said.
“As a company, we expect headwinds to persist to the end of our financial year. However, we are grateful to our bank, which has now availed a USD facility to enable your company to stock up for the upcoming busy and hot season.”
Without giving any figure, Samudzimu said this significant cash infusion will reverse the volume decline, allowing the year to end on a positive note.
“So we definitely expect volume performance to improve quite significantly there and we are working on a restocking program for the remainder of the year,” he said.
There will be no expansion program up until the end of the year.
“We will not be opening any new branches this year. We have working capital constraints. So all the resources are being availed for stocks. “
Volume performance, notwithstanding the challenges obtaining in the market, in the year to date up to August 2022, NTS recorded a 32% growth in volumes of premium tyres, a 12% growth in retreading business over the prior year and 5% and 1% above budget, respectively.
“This was due to very good supplier relations that extended some facilities even at a time when we were having challenges here locally,” he said.
“However, volume growth for budget tyres was negatively affected by the shortage of foreign currency to import.” On a monthly basis, it requires about US$1 million for imports.
Budget tires were therefore 76% below the prior year and 8% below budget. On a year-to-date basis, the overall volumes are 21% below the prior year and 60% below budget.
On the other hand, the government has since suspended duty on commercial tyres imported by approved importers. The new SI 160 of 2022 has ring-fenced 1.5 million commercial tyres for 24 months, giving the company the “opportunity to increase sales performance.”
At the AGM, shareholders approved the re-appointment of Grant Thornton Chartered Accountants (Zimbabwe) as auditors for the financial year ending 31 March 2023 – Harare