• Delayed payments may result in interrupted supply and restocking
  • Delays causing severe strain on working capital funding
  • Group’s revenue increased by 73% in HY’1 2021
  • Sales volumes improved by 67%

Harare - Listed medical supplies manufacturer and distributor, MedTech Holdings says it expects a reduction in the pace of sales growth in the second half of 2021 owing to delays in payment of foreign suppliers on the auction system.

This comes after many beneficiaries of the foreign exchange auction system have been complaining about its inefficiencies as it is taking too long for them to get the forex payment after having bid allocations.

In a statement accompanying half-year results ending 30 June 2021, the Group said most of their foreign suppliers are still on a prepayment basis and the lag in payment may result in interrupted supply and restocking.

“Delays in auction bid allocations are causing a severe strain on working capital funding and it is hoped that such allocations are paid within shorter timeframes in future. Uncertainty related to payment of legacy debt affects our foreign credit and with no definitive position this may result in serious challenges,” the Group added.

Meanwhile, the Group’s revenue for the six months increased by 73% to ZW$268,004 million from ZW$155,307 million in the same period last year.

MedTech’s sales volume for the period grew by 67% compared to that recorded in half-year 2020 driven by price stability and increased incomes resulting in improved demand, and improved working capital management to reduce the impact of any currency depreciation and thereby allow for more aggressive sales among other contributions.

The Group operates in three market divisions; fast-moving consumer goods (FMCG), medical supplies and manufacturing of light industrial products.

A breakdown of segment performance shows that the FMCG segment sales volumes increased by 127% compared to the comparative prior period while the manufacturing segment’s sales volumes improved by 45%.

During the half-year, the Group recorded a net exchange rate gain included in the net financing costs for the year of ZW$669,426 mainly due to the translation of monetary liabilities (mainly foreign creditors).

Looking forward, MedTech is hopeful that the current economic policies and measures being implemented, which have brought some price stability, will further improve the economic environment.

“If the economic improvements accompanied by a level of fiscal discipline can be maintained, then we do expect a better financial performance for the remainder of the year,” the Group added.

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