HARARE – Zimplow Holdings Limited (Zimplow), maker and marketer of a diverse range of products for the construction, infrastructure, and agricultural sectors in Zimbabwe, reported a 'strong' and 'encouraging' financial performance for the year ended 31 December 2021 underpinned by 54% growth in inflation adjusted revenue to ZW$6,6 billion.
A ZW$4,3 billion revenue was recorded in the previous year ended 31 December 2020.
In addition, the operating profit for the year under review grew by 222% to ZW$970,8 million in comparison to ZW$517,5 million recorded in the prior year.
“This encouraging financial performance was achieved by volumes growth from all the group’s business units, with Farmec and Barzem posting record performances,” Zimplow’s Chairperson Godfrey Manhambara said in a statement accompanying the financials.
The encouraging performance came despite the Group facing supply chain distortions to its recently acquired businesses, that is, Trentyre and Scanlink. The supply chain distortions were caused by COVID-19 induced movement restrictions, which in turn affected the supply of freight services.
“In addition, the Group faced challenges in the timely remittance of payments to foreign suppliers,” Manhambara said.
“We are, however, quite pleased with the manner in which the Group responded to the various challenges from the trading environment.”
Zimplow operates three (3) clusters, that is, the Agriculture Cluster, Logistics and Automotive Cluster as well as the Mining and Infrastructure Cluster.
The Farming division consists of three business units; Mealiebrand, Farmec, and Afritrac which oversee the manufacturing of animal-drawn equipment and tractors, and spare parts for agricultural equipment.
The division posted growth in volumes across all its main product lines. Volumes for tractors grew by 48%, tractor-drawn implements by 56%, parts sales by 30% and service hours by 22% in comparison with the prior year.
This resulted in overall revenue growth of 48% and a growth in the Company’s operating profit by 69%, in real terms against the prior year's performance.
Commenting on this division’s performance, Manhambara said the business unit is steadily growing towards being the leading distributor of agricultural equipment in Zimbabwe.
“The focus is now on achieving convenience for our customers from an aftersales perspective through a highly engaged backup support team,” he added.
Mealie Brand posted an overall implement sales volumes growth of 21% and spares by 3% against the prior year, anchored by export performance in the year under review. Revenue grew by 34% and operating profit by 21% in real terms against prior year performance.
Under the logistics and automotive cluster, Scanlink recorded a strong performance despite numerous headwinds attributable to COVID-19 induced supply chain disruptions which negatively impacted the operations of Scanlink. Parts sales grew by 30% driven by strong demand and revenue and operating profit grew by 15% and 145% in real terms against the prior year.
Trentyre grew its revenue by 15% and operating profit by 193% in real terms compared to the prior year. It posted a positive volume performance driven by improved distribution channels and stock availability. The volumes of Passenger Car Radial (PCR) tyres grew by 28% against the prior year.
Improvements in stock availability also propelled growth in volumes for Truck, Bus and Radial (TBR) tyres by 23% against the prior year.
Meanwhile, under the mining and infrastructure cluster, CT Bolts, Powermec, and Barzem also recorded solid volume and financial performance.
The business unit achieved volume growth of 48% against prior year performance driven by the drive towards establishing new market segments such as prepacked fasteners for the retail market, specialised mining bolts, and various other consumables.
Volumes performance was subdued to the low demand for alternative energy sources on the back of a relatively stable power supply through the national grid in 2021. Consequently, generator units sold registered a 16% drop from the prior year.
However, the performance of Powermec’s new Solar product range was encouraging as the business unit achieved a 167% growth against the prior year. The strong after-sales performance grew parts sales by 72% and service hours by 22% against the prior year, driving both revenue and operating profit up by 30% and 7% respectively in real terms, compared to the prior year's performance.
The business benefitted from the government’s drive to support infrastructure development which in turn culminated in increased earth moving equipment sales at Barzem. Overall, volumes of earth moving equipment sales grew by 84% against prior year performance. On the other hand, the focus on production by major mining houses that use CAT surface mining and handling equipment resulted in increased fleet maintenance. Consequently, parts sales grew by 75% and hours sold by 65% against prior year performance.
On the outlook, Manhambara expressed confidence that based on the performance as outlined above, the Group has adequate risk management systems and a viable business strategy to withstand the fluidity and complexities of the country’s operating environment.
“One of the key strategic matters the Group is currently seized with is the search for a new OEM of earthmoving equipment to replace the Caterpillar brand at the end of the Distributorship Agreement on 30 September 2022,” he added.