Harare – Zimplow Holdings, which is the largest manufacturer and distributor of farming implements in sub-Saharan Africa, reported a solid operational performance across its segments with the exception of Farmec for the 5 months period to May 2019.
Taping from the solid performance, revenue for the period grew by 86 percent to $29.8 million compared to prior year.
Operating profit increased by 784 percent to $13.4 million above prior year driven by the growth in volumes and impact of the exchange rate movement towards the end of May 2019 on the company’s foreign denominated monetary assets such as export debtors, backed by LCs and Nostro balances.
Zimplow operates through five divisions namely, Barzem, Mealie Brand, CT Bolts, Powermec and Farmec.
At Mealie Brand, volumes of implements grew by 49 percent driven mainly by the export markets.
“The export sales implement volumes grew by 232% countering the drop of 36% in the local market,” Group chief executive Vimbayi Nyakudya said in a trading update at the annual general meeting held in the capital on Thursday.
“We have a strong pipeline of export sales orders that we expect to fulfil by the end of the financial year.”
Powermec recorded a 106 percent growth in volumes against prior year with 35 generator units sold.
“The threat to business caused by the intensifying load shedding has triggered a rush to alternative power and therefore demand for our generators,” said Nyakudya.
In response, he said the company has since started scaling up stock holding in order to meet the surge in demand.
“We are monitoring our strategy to penetrate mining and construction sectors to service the entire Perkins engine driven equipment that we have not been looking after in the past.”
Barzem also recorded a modest performance skewed towards fleet maintenance to capital expenditure.
Parts uptake through the counter grew by 6 percent against same period last year, while hours sold through the workshop grew by 164 percent to 3 367 hours compared to same period last year.
“The unit is currently ramping up stock holding and workshop capacity in light of the projected growth in fleet maintenance acativities by our key customers as they shy away from capital expenditure,” said Nyakudya.
“We are confident of selling more units in the horizon as there seem to be progress in addressing the foreign currency bottlenecks currently being experienced.”
Additionally, CT Bolts division remained profitable recording growth in sales volumes of high tensile steel bolts by 98 percent against prior year.
In contrast, Farmec division recorded a negative performance on the impact of drought, subsequent drop in yields as well as soft producer prices in the 2018/19 agricultural season.
Tractor volumes have been 5 percent ahead of the budget albeit 43 percent down on last year.
Implements and parts uptake have been 25 percent and 21 percent lower than prior year respectively, while hours sold through the workshop have been 25 percent lower than prior year.
“Although volumes are down against prior year, the recorded performance has been ahead of our projections and budgets,” said Nyakudya.
On the outlook Nyakudya said the firm export sales orders, the demand for alternative pwer and solid performance from Barzem and Farmec are expected to spur the 2019 financial performance.
Equity Axis News
Raynold Mhotseka is a Journalism and Media Studies student at the University of Zimbabwe. He serves as a news writer at financial research firm, Equity Axis where he is currently on attachment. He can be contacted through the following email links, email@example.com and firstname.lastname@example.org.