• ZECO Holdings reports profitability and occupancy growth in Q1 FY 2024
  • This comes after it slashed FY2023 loss by 84%
  • However, challenges remain in managing expenses and nepotism

Harare- ZECO Holdings, the embattled firm led by Phillip Chiyangwa, has started the full-year (FY) 2024 on a positive note after reporting profitability and occupancy growth compared to the same period last year.

According to the company's latest trading update for the first quarter of FY 2024, its revenue grew to ZWL1.64 billion from ZWL1.62 billion, bolstered by an increase in occupancies from 53.33% in the comparative period in 2023 to 69.57%.

"The moderate occupancy rates are indicative of the space side entering the growth stage whilst construction and renovations take place," the company commented.

This positive performance comes after ZECO slashed its FY 2023 loss by a remarkable 84%, signaling a potential turnaround for the serial loss-maker that has been on a loss-making streak for more than a decade.

However, the company's administration and property expenses also accelerated, standing at 8.41% and 29.76% of revenue, respectively, for the quarter, contributing to the rise in production and operating costs.

ZECO's CEO expressed optimism, stating, "We expect new business once we complete construction of new shop space.

“The business will continue to positively innovate in the competitive environment by pursuing new market segments, including the construction industry for our other business unit."

The company's previous loss-making position was largely attributed to mismanagement, including nepotism, where Chiyangwa placed his less productive sons in top executive positions, leading to the alleged siphoning of company finances for personal gain.

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The company's loss-making position was also partly due to economic factors. ZECO Holdings had significant vested interests in railway wagons, but was primarily humbled by the collapse of the rail system in Zimbabwe. The company's reliance on the railway transportation business proved to be a liability as the overall rail infrastructure in the country deteriorated.

To address these challenges, ZECO made a strategic decision in 2022 to shift its business focus from railway transportation to the property and real estate sector, prompted by the uncertainties surrounding the railway transportation system, mine closures, and the prevalence of informal mining activities.

As part of this transition, the company sold its rolling stock assets for US$4.5 million and ventured into the real estate and property business.

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The positive results in the first quarter of FY 2024 suggest a possible turnaround for ZECO Holdings. However, the company still faces the challenge of managing its administrative and property expenses to maintain profitability and continue its growth trajectory.

Additionally, the company will need to address the lingering issues of operating as a family business, including the nepotism that previously contributed to its mismanagement.

Transitioning away from a family-centric structure and focus will be crucial for ZECO Holdings to sustain its positive momentum and avoid falling back into the loss-making position it has struggled with for over a decade.

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