Home » Industry » Willdale Targets Return to Profitability

Brick maker Willdale is targeting an immediate return to profitability after successful fund raising and restructuring exercises during a difficult period plagued by a choking cash crisis. Consulting chief executive Mr Clifford Mushambadzi made the bold declaration while giving an operations update at Willdale’s annual and extraordinary general meetings held in Harare yesterday.

He opined that after the successful turnaround, prospects were bright and Willdale’s value would easily top $100 million within the next five years.

Mr Mushambadzi said new equipment debt restructuring and fresh funding would increase production, improve efficiencies and set the firm on the path back to profitability this year.

“We have started the turnaround it’s now happening,” said the evidently excited chief executive.

Willdale incurred a loss of $744 000 in the year to September 2013 and as of that date current liabilities exceeded current assets by $4,2 million.

“With the funding now in place, capacity utilisation should increase to at least 60 percent from the current average of 30 percent, resulting in a positive operating profit position for the financial year ending 30 September 2014,” he said.

The EGM approved directors’ proposals to raise $3,2 million through cumulative preference shares right issue.

Shareholders approved all resolutions proposed for the company’s AGM and EGM, chief among them the proposal to raise fresh funding.

“With funding now in place, we do not have any excuse not to perform, the company is now poised for big things,” Mr Mushambadzi said.

With new equipment having been acquired, focus is now on incremental production at an average of 30 percent per month until August this year.

Mr Mushambadzi said rehabilitation of idle assets such as kilns will enable the company to raise production of bricks by 3 million a month over and above already existing capacity.

Willdale has reason to be bullish as it anticipates a drastic change in fortunes after facing some anxious moments regarding pressure from suppliers and workers who sometimes endured months on without getting paid.

Funding raised from the rights issue will go towards further capital and working capital expenditure as well as retiring the bridging finance

loan of $1,5 million secured from CBZ Bank.

This will further lower the cost of borrowing, which has already been reduced through debt restructuring for loans amounting to $3 million.

The restructuring of loans has resulted in the tenure of existing loans, a significant portion of which was an overdraft, being rescheduled from short term (two years) to medium term (five years).

Further, the cost of the various loans has also been negotiated downward from an average of 11-16 percent to 10 percent per year.

As the demand for quality bricks currently exceeds supply, Mr Mushambadzi Willdale is poised to regain its market leadership position, through increased production, supported by sustainable profitable business model.

“The full impact of work done to date on both funding and procurement of mobile equipment, rehabilitation of idle assets, plus changes to the way things are done, will be best felt in the year ending September 2015,” he said.

Recapitalisation has allowed the company to cut on uptime time from an average of 56 percent in 2013 to an average of 80 percent this year.

From next week, right up to August 2014, Willdale will be receiving batches of forklifts, until the quantity it has ordered has been achieved.

The firm also plans to acquire its own fleet of tippers, so that the firm reduces over-reliance on hired equipment, in all its mining operations.

Source : The Herald