National Tyre Services : Skids On Lockdown

August 25, 2020 at 08:06 am

National Tyre Services Limited (NTS) recorded depressed volumes performance for the first quarter to June 31, 2020 due to Covid-19 induced lockdown.

According to the group, overall volumes across all units went down 49 percent when compared to same period last year as trading was suspended following the announcement of the nationwide lockdown effective March 30, 2020.

Zimbabwe effected a national lockdown to limit the spread of the pandemic, which saw trading hours reduce while other businesses completely suspended trading as they were not deemed essential services.

"The adverse effects of the Covid-19 pandemic on the business environment continued during the quarter under review and became the single largest contributor to depressed performance.

"The disruptions caused by the complete shutdown in April and the reduction in trading hours in the subsequent months meant that volumes were lost," said NTS in a trading update for the quarter under review.

NTS, however, put in place mitigatory measures to satisfy market demand, albeit at subdued levels due to limited movements as a result of lockdown measures as well as constraints in disposable incomes. Prior Covid-19 outbreak and the subsequent national lockdown, the economy was already facing headwinds mainly due to foreign currency shortages, high inflation that eroded disposable incomes as well as utility supply challenges.

During the quarter under review, new tyres sales units at 4 550 were 47 percent below prior year as branches closed operations for a full month in April 2020 and importation of tyres was also negatively affected when countries restricted movement across borders.

At 7 132, services volumes decreased by 57 percent compared to 16 253 recorded the previous quarter ended June 30, 2019 as customers could not travel as before due to Covid-19 travel restrictions introduced. Figures from the group show that retreading halved to 1 869 compared to 3 750 recorded in the prior year comparable period.

At 1 446, repairs went down 75 percent from 2 534 in the same quarter last year.

Tubes unit sales had the lowest decrease of 8 percent when compared to same period last year as the company continued to service farmers listed under the essential service providers during the total lockdown period.

Going forward, Covid-19 pandemic is expected to persist and its effects felt right across the economy. For NTS, key areas to watch and ensure the continued viability of the business will be cost control, an uninterrupted supply chain and avoidance of loss of capital against inflationary pressures.