- Published on Tuesday, 28 August 2012 02:08
- Written by ABDUEL ELINAZA
- Hits: 671
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. According to the Dar es Salaam Stock Exchange (DSE) data, this is the first time in the last consecutive five years, for the firm the first to be listed at the bourse posted profit.
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.