Home » Industry » Turnall Projects Turnover to Grow 16 Percent

Turnall Holdings has projected turnover to grow by 16 percent to $50 million this year on the back of a 20 percent increase in volumes, chief executive John Jere said.In a trading update after the company’s annual general meeting yesterday, Mr Jere said volumes would jump by 20 percent driven by tiles, which were not there last year.

“Despite a slow start and the change of model towards a cash model, volumes have firmed up in April and May 2014 and we are forecasting sustained growth up to year end,” Mr Jere said.

Turnall says it suffocates competition, at 85 percent market share, largely due to its ubiquitous market presence.

The tile and speciality business is forecast to contribute about 25 percent to turnover at $12,5 million, exports growth will contribute $3,5 million to the $50 million while a small profit or break-even is expected.

At present, sales at 16 000 tonnes are 17 percent below same period last year at 19 000t, with capacity utilization at 45 percent, lower than last year’s 55 percent with gross profit margins also lower than in 2013.

This performance will come when Turnall has adopted a cash model to improve cash flows to manage liquidity constraints, which briefly affected volumes.

Key pillars on this strategy includes cash generation in an effort to improve cash flows through, improved cash collections (debtors book) and inventory reduction.

“To that end, a cash model was adopted as key in 2014 as opposed to the credit sale model which has been in place since dollarisation,” Mr Jere said.

He added that in adopting the model, management was aware that we were going to meet with some resistance and therefore had to be prepared forego profits if the company was to generate the cash flows and change customer mind-sets around the cash model.

Against this background, Turnall is targeting a debtors’ book of $10 million from $17 million last year and inventory of about $14 million from $18 million last year.

Debtors have come down from $17,5 million to $13 million. Turnall said it would reduce this number to around $10 million by the end of the financial under review.

Borrowings are projected at only $3 million this year from $9 million in 2013, which should significantly help in lowering our interest payment for 2014 and beyond. Already, borrowings have come down by $800 000.

The company has already repaid a $5 million loan from PTA Bank and has approached the same for working capital facility to refinance local expensive debt.

Turnall will seek another $5 million loan facility at probably the same cost of 4 percent annual interest to clear part of its $9 million local debt at 16 percent interest.

Source : The Herald