Zimbabwe Stock Exchange-listed brick maker, Willdale, is pinning its 2020 hopes for improved volumes uptake on large scale projects such as schools construction and university expansion programmes to ensure continued dominance in the market.
This comes on the backdrop of Willdale’s 23 percent volumes decline compared to the prior year.
An apparently inhibiting 2019 saw volumes nose-diving in a number of companies in the construction sector.
Causative factors included the pricing regime, which is largely linked to the exchange rate that saw most goods and services rising sharply following liberalisation of the exchange rate in February last year.
Furthermore, firms that manufacture construction materials suffered a heavy blow as the majority of workers were unable to afford building materials owing to low salaries, which are lagging behind hyper-inflation levels.
This led to suppressed volumes uptake across the construction related firms. In November, Lafarge Cement Zimbabwe Limited revealed that volumes weakened by 19 percent in the second quarter, negatively affecting the concern’s financial performance.
However, Willdale continues to bank on large scale projects mainly driven by Government and tertiary institutions spending in this new year.
It is optimistic that tough economic conditions that prevailed last year will thaw to stimulate business in the sector.
“The harsh economic environment in 2019 resulted in low effective demand, which affected volumes growth. However, as we progress, opportunities exist in housing development, school construction, university expansion and Government infrastructure being pursued.
“Economic stability will unlock potential in these and other prospects, we have capacity to exploit opportunities that will be presented by a stable economy,” said Willdale in its financial results for year ending September 2019.
Nevertheless, the brick maker managed to record an 8 percent jump in revenue for the year ending September 2019 attributable to average price increase on its produce.
Operating profit rose by 335 percent to $43 million compared to $10 million in 2018 after charging $3 million to depreciation of plant and equipment from $5 million in 2018.
Willdale indicated that rapid pace of change driven by government will yield economic growth, stability and increase aggregate demand.
Last year the brick making firm introduced, Topaz brick to curb brick imports that have over the years flooded Zimbabwe and increase its market presence in the country.
The brick making firm expects the new product to be a stimulant to depressed sales volumes experienced by the company.
Lately, the country has been witnessing a surge in brick importation especially from Botswana, ballooning the country’s import bill buying a product which can be entirely produced locally.