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| TOL plant in Dar |
TOL Gases vision to make a 6bn/- profit in the next three years has
started to pay off.
The journey to dream realisation, of the only industrial
and hospital gases producer in the country, started to bear fruit last year
after posting a pre-tax profit of 410m/- against a loss of 1.5bn/- in 2010.
This was followed by another mid-year net profit increase of 483 per
cent equals to 517.28m/- at the end of this June, in comparison to merely
88.68m/- of the same period in 2010.
The company last year came up with an ambitious new strategy known as
‘Mission 6:3’ seeking to generate a 6bn/- profit in three years.
To achieve the
TOL goal, the management planed to increase sales and reduce operational costs.
In 2011, the gas manufacturer, increased revenue by 26 per cent to 7.35bn/-
from 5.85bn/- in previous year, while cost of sales increased slightly by 2 per
cent to 5.18bn/-.
While in the first half of this year, TOL revenue jumped up by 16 per
cent to close at 4.46bn/- indicating that the revenue, if all remains equal,
the earning will overtaking what generated in last year because peak period of
gas sales starts between July and August.
The TOL Chairman, Mr Harold Temu, told the last annual general meeting
(AGM) that the main idea behind was that the firm has to operate profitably to
warrant its self sustainability.
“TOL is in an ambitious short mission that
will serve to usher us back into profitability code named ‘Mission 6:3, meaning
the company aims to make 6bn/- within the first three years,” Mr Temu told the
AGM.
The chairman said the board has approved an ambitious short term strategy
targeting to increase carbon dioxide production by 17,000 tonnes to meet
domestic demand as well as to supply clients in Malawi and Zambia.
“Successful
execution of the turnaround strategies will also depend on successful
integration of the three core attributes of the overall turnaround strategy,
namely people, operations and strategies into the service delivery platform
through use of the most current technology,” Mr Temu said.
TOL’s financial statement shows that at the end of 2011, the firm operating
expenses increase by 4 per cent to 2.097bn/-.
The Zan Securities Chief
Executive Officer, Mr Raphael Masumbuko, said that he has long been telling
investors that management change could turn the loss making firm into
profitability as long as its products are marketable.
“This (profitability) is good news to the market,” Mr Masumbuko said,
adding: “It shows that with good management profit is always achievable.” The
results, although showing that no dividend is likely to be paid, are
encouraging to push further the firm’s share demand.
“The profit attained, I am sure, will not lead to pay dividends because
the company has many obligations to address,” said Mr Masumbuko.
The TOL’s Manging Director, Mr Daniel Warungu, said last
year that they saw many challenges this year but prospects are good for the
oldest firm at the bourse.
“The company has a bright future with a secure market for industrial
and medical gas, plus its leading product, carbon dioxide,” Mr Warungu said
during the last year’s AGM.
TOL has the capacity to produce 6,000 tonnes of
carbon dioxide, which is its core business per year, while the demand for the
product is over 19,000 tonnes per annum in the three countries.
During the last shareholder meeting, Mr Warungu said, the company
intends to set up a new factory at Rungwe District in Mbeya Region as a
strategy to increase productivity.
In the six months that ended in June, the
firm, purchased property, plant and equipment worth of 3.77bn/-. Nevertheless,
stockbrokers are anticipating that the demand for TOL shares will increase and
push up the price from the current 200/-, which is below the initial public
offer price of 500/- per share.
Since it was listed, TOL posted profits of 102m/- and 293m/- in 2006
and 2007, respectively after the right issue that boosted its capital level.
In
the same years, the government absorbed complicated debts of the company. “The
new results bring back shareholders’ hope that the company remains sound after
many years of poor performance,” Mr Masumbuko said.
Source: The Daily News, http://www.dailynews.co.tz, reported by Abduel Elinaza
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