HARARE – National Tyre Services volumes in the nine months to December are up 27.62% mainly due to stock availability and marketing effort to push sales at a time when its main competitors in the informal sector were closed at selected times during the varied lockdowns.
According to the group’s trading update for the third quarter to December, a sharp increase in volumes had been seen in the October-December quarter at 52 608 from 26 476, an increase of 99%.
In the year to date, volumes are at 116 384 from 91 195, notwithstanding the Covid-19 challenges.
The volume of new tyres sold in Q3 increased by 213% compared to same period last year with the company saying it continues to implement robust marketing strategies to promote sales complemented by good stock availability while the good rainfall had resulted in high demand for agricultural related tyres.
Retreading volumes increased by 21% compared to same period last year due to focused key account management effort to retain strategic fleet customers while services category volumes increased by 87% compared to 2019.
Challenges faced by the business in the period included the lockdowns across the region which resulted in serious delays of stock movement across the border.
“Movement of stock into Zimbabwe was further curtailed by cyclones that delayed berthing of ships at Beira with stocks from China and India.” This resulted in the market experiencing noticeable stock outs particularly in December 2020.
Locally, critical demand for forex to import essential requirements including Covid-19 testing kits, vaccines and raw materials, weighed in. Going forward, the effects of the pandemic are expected to subside.
Key areas to watch, to ensure the continued viability of the business, will be cost control, an uninterrupted supply chain and avoidance of loss of capital against inflationary pressures.
With the economy having opened up, the prospects for NTS however are weak as it faces a lot of competitive pressures. In previous results commentaries, the company acknowledged that the informal market controls about 20% of the market and that figure has increased in recent times with the number of tyre sales sites that are mushrooming across town centres. On the Zimbabwe Stock Exchange, the stock has a negative forward PE of 0.42 and sits on a share price of 202c.