NTS slips on foreign exchange shortages

the herald

business journalist

Difficulties in obtaining foreign currency saw National Tire Services (NTS) report a drop in sales volume for the three months to December 2021, a company official revealed.

According to the company’s third-quarter trading update released on Friday, volumes for the period were down 29% from a year earlier as it struggled to secure inventory in time for the holiday season. “due to difficulties in obtaining adequate foreign exchange”.

A total of 8,931 tires were sold during the third quarter to December 31, 2021 compared to 12,632 tires sold the previous year.

Zimbabwean businesses bid for foreign currency on the auction system run by the Reserve Bank of Zimbabwe (RBZ), but often do not receive adequate supplies as the system uses a prioritized list and also allocates winning bids on a pro rata basis .

This means that some currency requirements of bidding companies are not met.

The company’s operations have been limited by a difficult economic climate given the negative effects of the Covid-19 pandemic, soaring inflation and “insufficient foreign exchange to import tires”, said the company secretary, Stewart Mandimika.

To make matters worse, the company also had to contend with power outages, which impacted production at its retread plants, “negatively affecting standard customer turnaround time.”

Electricity supply in the country has been erratic due to constant outages at the Hwange Thermal Power Station and power generation shutdowns at the Kariba Hydroelectric Power Station to allow for repairs to the dam walls.

However, despite the challenges, both retread volumes and new tire volumes showed positive growth for the nine months to December 31, 2021 compared to the same period a year earlier.

New tire volumes for the nine months to Dec. 31, 2021 were up 23% from the same period last year, representing significant progress under challenging circumstances, Mandimika said.

He added that retreading volumes were up 2% year-to-date compared to the same period last year as the company implemented marketing initiatives to support retreading customers during the quarter. under review despite a difficult operating environment.

Commenting on the outlook, Mandimika said the main areas to watch, to ensure the continued viability of the business, will be cost control, an uninterrupted supply chain and the prevention of capital losses in the face of inflationary pressures.

“It is hoped that the forex auction platform will develop further to meet the needs of the industry,” Mandimika said.