• Revenue nearly tripled to ZWG6.18 million as sales activity recovered
• Administration costs surged 150% to ZWG8.59 million
• ZECO swung to a ZWG2.95 million loss from a ZWG3.17 million profit

Harare – ZECO Holdings has nearly tripled revenue during the first half of 2026, but a sharp increase in administrative costs overwhelmed the improvement in trading and pushed the group back into loss.

Revenue increased to ZWG6.18 million from ZWG2.06 million in H1 2025, representing growth of almost 200%. Cost of sales increased at a slower rate to ZWG3.78 million from ZWG1.52 million, allowing gross profit to rise more than fourfold to ZWG2.40 million from ZWG540,137. 

The stronger sales performance materially improved the economics of the underlying product business. Gross margin increased to about 38.9% from 26.2%, meaning ZECO retained a larger share of each revenue dollar after direct material costs than it did in the comparable period.

That improvement was absorbed further down by costs. Administration costs climbed 150% to ZWG8.59 million from ZWG3.43 million, exceeding total revenue by about 39% and standing at more than three and a half times the gross profit generated from sales. 

The cost build up was concentrated in two areas. Employee costs increased 55% to ZWG3.80 million from ZWG2.45 million, and administration expenses climbed to ZWG4.70 million from ZWG944,727, an increase of almost 400%. Audit fees also rose to ZWG94,154 from ZWG35,656. 

Those increases changed the outcome of the period. ZECO recorded a ZWG2.95 million loss from continuing operations after posting a ZWG3.17 million profit in H1 2025. The loss was fully operational, with the company stating that there were no one off or non operational adjustments affecting headline earnings during the period. 

Other income also provided less support than it did a year earlier. ZECO earned ZWG3.24 million from other income, down from ZWG6.06 million, largely because rental income fell to ZWG3.14 million from ZWG6.06 million. 

The reduction means the group had less non core income available to absorb its overhead burden at the same time that administrative expenditure accelerated. Revenue from actual sales strengthened significantly, leaving the cost base as the larger constraint on profitability during the half.

Chairperson Rafemoyo said the group expects modest business growth from opening new markets. He also said ZECO is operating in an environment of relatively stable currency conditions following tight monetary policy during the first half. 

The balance sheet carries additional pressure from the loss making period. Cash and cash equivalents fell to ZWG152,824 from ZWG348,985 at December, with operating activities using ZWG50,614 during the six months. Trade and other payables increased to ZWG5.69 million from ZWG2.04 million. 

ZECO is also still carrying a large discontinued operations portfolio. Assets associated with discontinued operations stood at ZWG76.53 million, representing almost half of the group’s ZWG154.37 million total asset base. The company said Zimplastics and Delward were discontinued after changing market conditions and competition from cheap imports made the businesses unsustainable. 

The group is relying on rental income, new tenders and additional revenue streams from properties to support its recovery. Its going concern note states that material uncertainty remains over future operating results and cash flows, with the company pursuing new tenders, controlling staffing according to active projects and developing additional revenue sources from its property portfolio. 

ZECO has therefore already achieved the first part of an operating recovery by rebuilding sales and improving gross margins. The next threshold sits in the cost structure, where ZWG8.59 million of administrative expenditure is consuming the benefit generated by a near threefold increase in revenue.

A sustainable turnaround now requires revenue growth to continue without a comparable expansion in overheads. The first half established that ZECO can generate substantially more sales, but profitability will remain constrained until administrative expenditure grows materially slower than the business it is meant to support.

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