- 12% decline in toplines to US$20.6 million, but improving trend
- Mealie Brand plough costs reduced by 23%
- Farmec maintains market share despite 3% revenue decline
- Powermec expected to return to profitability by year-end
- Scanlink projected to experience improved sales
Harare- Zimplow Holdings Limited reported a 12% decline in topline to US$20.6 million, in the thrird quarter to 30 September 2024 compared to the prior year according to the company’s latest trading update.
Despite this, the company's performance improved during the period under review, with most business units exhibiting a positive trend towards profitability, following a loss before tax of US$1.4 million as of June 30, 2024.
The group faced unprecedented challenges in HY2024, resulting in its first loss since the reintroduction of the Zimbabwe dollar in 2019.
This loss coincided with the launch of the country's fourth currency reform in nearly a decade which proved to be disastrous, declining by 43% in just one day.
The drought, which was the worst in over 40 years, significantly impacted the company's agricultural-focused flagship brands, including Mealie Brand.
Furthermore, the influx of cheap, second-hand Chinese and Indian trucks undermined Zimplow's competitiveness in the mining and logistics sector. The company's premium European-made Scania trucks, equipped with Tier 4 engines, struggled to compete with cheaper, lower-quality imports.
The informal sector's supply of poorly made, low-priced ploughs, tractors, and spare parts also eroded Zimplow's market share.
In Zimbabwe's price-sensitive market, quality often takes a backseat to affordability.
To address this, Zimplow's Acting CEO, Willem Swan, is advocating for government-initiated antidumping policies and stricter roadworthiness tests for imported second-hand trucks.
To mitigate these challenges, Zimplow implemented cost-reduction strategies, including a 23% decrease in Mealie Brand plough costs.
The company also negotiated reduced procurement costs with suppliers and acquired the Chinese distribution rights for FAW to counter competition from cheap imports.
Despite these efforts, Zimplow does not expect to achieve profitability this year but aims to break even.
However, the company's agricultural equipment division, Farmec, maintained its market share despite a 3% revenue decline.
Implement sales rose 12%, and tractor unit sales were only 4% below Q3 2023 levels.
Powermec, the power generation and solar solutions division, is poised to return to profitability, driven by a 500% surge in solar installations and 125% increase in generator hire.
CT Bolts, the fasteners and engineering division, reported a 2% turnover increase, bolstered by the recent commissioning of its nail factory.
With the onset of the rainy season, Zimplow Holdings anticipates a significant performance turnaround, driven by improvements across its business units.
Mealie Brand is expected to regain market share, while Farmec will maintain its market share. Scanlink will experience improved sales, and Powermec will return to profitability by year-end.
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