• Zimplow used erratic power supplies to boost Powermec sales
  • The Group expects its solar products sales to continue growing due to ZESA’s insufficiency
  • Nearly all units were on growth trajectory

Harare- The Zimbabwe Stock Exchange (ZSE)-listed diversified group Zimplow Holdings Limited hailed the erratic power cuts experienced in the country, a situation which the Group managed to exploit to increase its profitability. 

During the three months to March 2022, the nation continued to experience sustained power cuts as power utility, Zimbabwe Electricity Supply Authority (ZESA) fell short to provide sufficient power for both domestic and industrial use. 

However, this is the weakness that the Group used to increase sales from its subsidiary, Powermec. The unit’s volumes in gen-sets and solar equipment increased by 44% ahead of prior year whilst capacity utilisation increased by 71%. 

Powermec top line improved by 230% in comparison to the same period in the prior year and the Group is confident the performance of the solar range of products will continue to gather traction as it believes ZESA will pursue consistency in disappointing its clients. 

“The power supply grid has been erratic, resulting in increased reliance on alternative power,” the Group said in a statement accompanying the trading update for the first quarter ended 31 March 2022. 

“In the first quarter of 2022, the national grid experienced increased power cuts boosting demand for the Company’s products and services.”

“The performance of the solar range of products continues to gather traction and the Group looks forward to a strong performance premised on increased demand for alternative power products given the power outages experienced so far in 2022,” the Group added. 

Meanwhile, despite alfo facing headwinds of foreign currency scarcity , hovering inflation and effects from the Russia-Ukraine war, the Group’s most subsidiaries displayed solid performance. 

This in turn, resulted in the Group’s revenue and profitability in real terms increasing by 5% and 48% respectively. 

“The Board is encouraged by the resilient performance as Management continues to take advantage of pockets of opportunities in the market given the diversified structure of the Group.”

In the agricultural sector, Farmec business unit recorded a significant growth in volumes across all product lines. 

Tractors and implements volumes increased by 53% and 13%  while arts sales and service capacity utilisation increased by 7% and 51%  against prior year and same period under review. 

“Farmec is expected to continue driving Group performance given the firm demand experienced in the first quarter of 2022,” said the Group. 

Mealie Brand unit registered a growth in export implement volumes at 26% ahead of prior year setting the subsidiary to a positive start with spares sold ahead by 41% against prior year, despite local implements volumes dropping by 15% against same period last year. 

The Group said the erratic rainy season and hyperinflationary environment has dampened uptake of animal drawn implements locally forcing farmers to rely on maintenance of their existing implements.

However, the Group expect the export market volumes to continue to deliver positive performance given the better rainfall patterns experienced in the region outside Zimbabwe and the relaxation of COVID-19 restrictions.

Within the logistics and automotive cluster, Scanlink managed a revenue growth of 64% in real terms compared to the first quarter in the prior year on the back of a strong after-sales performance. 

Availability of trucks and buses from the principal supplier has improved. In addition, volumes sold in the period under review were in line with prior year.

Scanlink parts sales increased by 57% and service hours grew by 6%.

“It is pertinent to point out that with improved supply of truck and buses, the business unit is confident of increased sales volumes going into the third quarter of 2022,” added the Group. 

Trentyre recorded a 21% growth in off the road tyres. However, lower than expected performance for the commercial and consumer tyres resulted in an average 14% drop in revenue in comparison to prior year same period. 

However, Barzem performance succumbed to foreign currency bottlenecks resulting in depressed volumes of earth moving equipment at 88% below last year’s performance. 

“Management concentrated on value preservation and the provision of tailor made services in order to meet the fleet maintenance needs of our customers.”

To that end, workshop efficiencies were 53% ahead of prior year for the same period under review.

CT Bolts division continued on a growth trajectory on recording 25% increase in tonnage of fasteners sold compared to the same period in 2021.

“A focus on the core business, which is delivering quality and reliable fasteners to the sectors we operate in has so far driven CT Bolts performance,” said the Group. 

Going forward, the Group expect its new positioning in the earth moving market to unlock the Group’s capability, infrastructure and expertise to deliver sustainable returns and fulfil value preservation objectives for all our stakeholders.

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