Zimbabwe’s National Tyre Services said on Friday that the tyre industry in Zimbabwe, like the rest of the economy, “continued to suffer from the combined effects of low consumer demand and foreign payments delays”, as a liquidity crunch continues unabated.
Although the Zimbabwean economy has been difficult over the past few years, South Africa’s Tiger Wheel and Tyre has sought to expand, opening two branches in Harare, Kwekwe, Bulawayo and recently in Victoria Falls.
Stephen Nyathi, who manages the Victoria Falls branch, said they were “excited to introduce ourselves to motorists in the area” which is one of Zimbabwe’s prime tourist destinations.
But National Tyres has not been as bubbly as Tiger Wheel and Tyre, with James Moyo, then chairperson of the company, saying revenue for the year to end March 2017 declined by 8.8percent. The company delayed release of its financials owing to delays in completing the audit process.
“The sales mix was dominated by budget brands whose margins are lower than premium brands. The cost containment programme commenced in the prior year yielded results as the loss for the year declined by 75 percent,” Moyo said.
The loss for the year amounted to $155700 after revenues declined to $11.9 million.
Moyo added that “the growth of the informal sector created an uneven playing field, resulting in fierce price competition which diluted margins” for the company during the period under review.
The company is, however, optimistic of Zimbabwe’s future prospects owing to the improved agricultural season and firming commodity prices.
This will boost its sales of premium tyre brands for the agriculture and mining sectors, while farmers get a windfall from tobacco and maize sales.
“The company’s improved financial performance will be sustained by higher margins from premium brand, direct sourcing and the restoration of normal relations with two of our major foreign suppliers.”
BUSINESS REPORT ONLINE