NTS profits narrow due to forex challenges

NTS profits narrow due to forex challenges
Published: 31 July 2017
NATIONAL Tyre Services Limited (NTS) profits narrowed from $624 405 to $153 919 during the year ended March 2017, as the company continues to suffer from low consumer demand and foreign currency shortages.

The company's revenue dipped from $13 million to $11,9 million during the period.

"Given the difficult market and supply chain constraints, revenue declined by 8,8% compared to prior year. The sales mix was dominated by budget brands whose margins are lower than premium brands. The cost containment programme commenced in prior year yielded results, as the loss of the year declined by 75% compared to the prior period," the company said in a statement accompanying its results.

NTS's total assets were $3,7 million in March 2017, down from $3,8 million during the corresponding period last year.

"Although the operating environment remained difficult due to persistent cash shortages and general tight liquidity, the good rains experienced resulted in a bumper harvest across major crops. This was complemented by firming international mineral pieces, which have laid strong foundation for positive growth in the forthcoming period," the company said.

NTS bemoaned stiff competition from the informal sector, which has become a favourite option for most tyre consumers due to low prices.

"The tyre industry, like the rest of the economy, continued to suffer from the combined effects of low consumer demand and foreign payments delays. The growth of the informal sector created an uneven playing field resulting in fierce price competition, which diluted margins,"

In line with the distribution footprint, the company said it opened new branches in Kwekwe and Zvishavane complemented by new distribution points in OK Mart stores operating in Harare, Bulawayo, Gweru, Kwekwe, Mutare and Victoria Falls, which now sell the company's range of tyres.

"The good agricultural season supported by firm mineral prices will contribute to a more positive economic performance. The company's improved financial performance will be sustained by higher margins from premium brands, direct sourcing and a wider distribution network. The restoration of normal relations with our major foreign suppliers will go a long way in galvanising both the re-treading and new tyre sales business units," the company said.
- newsday
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