HARARE: National Tyres Services Limited (NTS) recorded a 10 percent decline in its revenue to $6,7 million for the half year ended September 30, 2015. During the comparable period last year, NTS posted $7,5 million revenue. In a statement accompanying NTS financial results for the period under review, the company’s chairman James Moyo attributed the drop in revenue to the declining economic environment.
The firm’s operating loss extended to $366,117 as at September 30, 2015 compared to $112,567 during the prior period last year. “Overall performance was negative with revenue declining 10 percent to the same period last year. “The decline in revenue and the pressure on the margins were the major contributing factors which resulted in a loss of $222,154 before tax,” he said.
He said the economic environment was expected to remain constrained. “Pivotal to its growth strategy, the company will extend its product range to include more value offerings, manage supply chain to ensure key products availability while continuing to rationalise and improve the branch network,” said Moyo.
“This will be complemented with cost containment measures, as the company focuses on returning to profitability in the new term.” He said the company was slow to address costs in a declining revenue and margin environment, as overheads were at the same level compared to the corresponding period last year resulting in a loss.
“The price reductions by suppliers were not significant enough to have an impact on contribution, but negotiations are continuing in order to widen products offering profitable prices,” he said.
“The declining economic environment continued to affect the operations of many companies. Consequently, increasing unemployment and liquidity constraints curtailed the consumer and in turn, impacted negatively on business and capacity utilisation. “In a price sensitive market, focus is more towards value goods and services. The company responded to this challenge by identifying source markets for budget brands.”
Moyo explained that during the period under review, growth was recorded in sales of budget brands. However, he said there was an overall decline in units sold due to several factors including unavailability of specific product lines.
“Procurement lead times and intense price competition in the market contributed to slowdown. “The company implemented initiatives to address these recent developments and the results are beginning to show. A review of our branch network configuration was undertaken in order to improve accessibility and convenience to customers,” he said.
