- Expects full-year 2021 profit to be lower than last year
- SI 127 of 2021 constrained pricing of output while input costs had a parallel rate base
- This ‘anomaly’ rendered local products uncompetitive against imports
Harare – Listed rubber and chemical products manufacturer, General Beltings Holdings cut its full-year profit outlook as the company grapples unprecedented costs in procurement of raw materials.
The Company saw a 31% and 48% volumes growth for the chemicals and rubber division respectively in the third quarter ended 31 September 2021. Both divisions operated profitably.
Company Finance Director Patrick Munyanyi said margins were, however, under severe pressure due to the strengthening of the rand against the United States dollar which resulted in increased raw materials costs.
“In addition, rapid dollarisation in the economy and the consequent basing of local costs on unofficial rates further reduced profitability when compared with same period prior year,” he added.
The Company highlighted enactment of SI 127 of 2021, which it says had the inevitable effect of constrained pricing of output while input costs had a parallel rate base.
This anomaly effectively rendered local products uncompetitive against imports thereby negating the fragile recovery since beginning of the year.
“Given the above the company is expected to operate profitably for the rest of the year although at reduced levels when compared with prior year and budget,” Munyanyi said.
The Chemicals division is expected to recover from the effect of lockdown measures which shut off its traditional markets while the rubber division is expected to maintain its recovery path and its out turn will depend on improved logistical flow of raw materials following the intermittent disruptions at the raw materials suppliers’ factories.
Equity Axis News