Willdale returns to profitability on the back of volume increases and better cost management
WILLDALE’s after tax profit for the year ended 30 September 2015 grew by 77% to $214 086 from a loss position of $931 011 in prior year and the group says it is now positioned to sustain profitability going forward.
Profitability was spurred by the injection of capital last year to the tune of $3 mln which resulted in high volumes and reduced unit costs.
In a statement accompanying the results, Chairman Alex Jongwe said prior year investment in refurbishing plant and acquisition of equipment resulted in improved capacity utilisation which is now at 70% from 60% the same period last year. Better efficiencies and cost management led to reduced cost of production.
“The plant is now poised to meet production in excess of 100 mln bricks per annum. We continue to explore various means to improve efficiencies and further reduce the unit cost of production without compromising on high quality standards required by our customers,” he said.
Jongwe said during the year, green and burnt production volumes grew 30% and 22% respectively from prior year levels.
Group revenue at $8.8 mln was 25% higher compared to $7 mln the prior year driven by a 40% increase in sales volumes. Jongwe said improved supply capability helped restore confidence in the market leading the company to recapture some of its lost market share.
The chairman said product mix remain skewed in favor of low margin common bricks and increased competition in that product range led to a 11% decline in average prices.
Jongwe said operating profit at $1.2 mln was up from a $0.6 mln loss position in 2014 and this was realized after charging $1 mln to depreciation of property, plant and equipment and in non-recurring expenses.
The company says cost management initiatives undertaken during the year resulted in a 22% decline in average production costs.
Capital expenditure for the year amounted to $0.327 mln and Jongwe said this was financed through cash flows from operations.
During the year, the company also made a provision of $0.06 mln to meet packages of employees whose contracts were terminated. The Chairman said the company will continue to review staffing levels and costs in order to further improve productivity and efficiencies.
Looking ahead, Jongwe said the group’s positive results are encouraging and reflect the success of the turnaround that the company is pursuing. Fin
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