Industrial recovery buoys NTS

The company specialises in the distribution and retreading of tyres for passenger, light and heavy trucks, earthmoving, mining and industrial vehicles.
It is one of the few companies that beat the country’s yearend capacity utilisation target of 60 percent and lifted the average manufacturing output level of the Confederation of Zimbabwe Industries (CZI)’s 2009 Manufacturing Sector Survey, which rose to 32 percent.
So far, the Zimba-bwe Stock Exchange-listed company is happy to have returned to profitability and recapture some of its lost domestic market share, whose ratio is projected to increase as more production lines come back on stream.
Traditionally a two-player monopsony dominated by NTS and Dunlop, the local tyre-manufacturing and retreading sector underwent industrial decomposition in the last five years after an economy-wide viability-related supply bottleneck triggered a proliferation of many small players.
A majority of the new entrants were merely distribution centres dealing in cheap imported brands to fill in the supply gap, and very few of these have survived the liquidity shocks of the multi-currency system, which has generally buttressed the comeback of larger competitors with economies of scale.
In the first half of its financial year, NTS reported an after-tax profit of US$46 889 with each share turning in US$0,18 in profits. But no comparative from the corresponding period last year could be qualified.
Revenue reached US$2 346,332, but only US$44 895 of this translated into profits, reflecting the overly high cost-to-income ratio confronting many businesses.
For the most part, utilities, wages and rents account for the bulk of the overheads. 
NTS’ equity position also weakened during the review period after the company unilaterally discounted the value of property, plant and equipment by 30 percent to US$3 792,950, resulting in a negative revaluation reserve of US$123 647.
The decision was taken without consulting external valuers, in acknowledgement of the adverse values derived last year, which hardly reflected the true and fair value of the non-monetary instruments.
Last year’s overstatement of non-monetary instruments has plunged many companies into losses this year.
Despite its robust rebound and modest profitability, NTS still faces increased import pressure as a result of the strong interest in the country by South African firms.
Already, Imex Tyres and Accessories, one of South Africa’s leading distributors of Firestone, Bridgestone and other international tyre brands, has opened a distribution centre in the country.