Harare – ZECO Holdings Limited said the Group’s performance was adversely affected during the half year ended 30 June 2019 as no major projects were undertaken due to inflationary pressures resulting in the suspension of major projects.
Listed on the Zimbabwe Stock Exchange (ZSE), ZECO Holdings builds rail wagons and locomotives through its subsidiaries for utilities in Zambia, Tanzania, Mozambique, Ethiopia and Kenya.
The company also manufactures roller shutters, electronic garage doors, steel windows and door frames, burglar bars, filing cabinets and agricultural implements for the Zimbabwe building and construction sector and export to countries in sub-Saharan Africa.
Despite reportedly experiencing a slowdown in month-on-month inflation rate over the past two months, year-on-year inflation according to research firm Equity Axis spiralled to 288.62% in August 2019 from 230.42% in July 2019.
The International Monetary Fund (IMF) also reported that the August inflation soared to nearly 300% due to the collapsing local currency which has continued to lose value to other foreign currencies since its abrupt introduction this year.
Meanwhile a combination of other factors including lack of confidence, policy uncertainty and distortions within the foreign exchange markets are increasing pressure on the loss in value of the local currency.
Due to this volatile operating environment exacerbated by the ongoing power cuts and fuel shortages, some businesses have seen their operations stalled why others on worst case scenario are forced to shutdown
ZECO’s negative bottom line widened during the period under review even after recording a 156% increase in revenue to ZWL$0.323 million from ZWL$0.127 million in the same period last year.
“Despite cost containment efforts, the group recorded a loss of ZWL$0.886 million,” the Group Chairperson Dr Phillip Chiyangwa said in a statement accompanying the financials.
This compares to a loss of ZWL$0.582 million recorded in the prior comparative period in 2018.
On the outlook, Dr Chiyangwa said the monetary and fiscal policies being enunciated by government should positively improve the operating environment although in the short term inflationary pressures may persist with gradual improvement.
“The Group will continue to innovate and maximise on any opportunity which avails itself including prospects for linkages with local and regional players,” Dr Chiyangwa said.
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