Zimplow units in improved sales growth in 4 months to April
HARARE –Firm producer prices for maize, cotton and wheat announced by Government have positively affected Zimplow Holdings as this has improved disposable income among smallholder farmers and commercial farmers.
Group CE Mark Hulett told the AGM that turnover for the year to April was 2% above the prior comparable period and should improve on the back of the improvements registered in the agriculture sector this season.
He however said “the trading environment remains fluid” with uncertainties in foreign exchange payments which has affected all businesses, particularly Barzem in the first two months of the year. Furthermore most capital projects in the mining sector remain in the pipeline with liquidity being the key constraint.
Hulett also said there were a number of capital projects lined up including the Beitbridge- Chirundu highway project which are likely to offer opportunities to the group’s equipment business (Barzem)
Barzem started with a backlog of foreign currency payments which significantly affected the company’s level of service delivery. Nonetheless intervention and support from the Reserve Bank of Zimbabwe unlocked the bottleneck placing the business back on track. The number of CAT units sold in the first four months grew by 450% on the back of expansion in the energy, gold and chrome mining sectors. The CAT powered generator sales continued to improve with volumes 200% ahead of the previous comparable period.
At Mealie Brand, trading volumes for animal drawn implements in the first quarter improved by a notable 1,373% compared to the same period last year. The increase was mainly attributed to export orders. The volume of implements exported improved by 7,500% while local implements grew by 317%.
“We welcome the protection provided to our animal drawn business through Statutory Instrument 64 which has positively impacted the business.
“The company will continue benefit from the introduction of import controls while the strong mineral and tobacco exports are resulting in improved forex availability.”
Sales for the first quarter at Farmec improved by 182% compared to the same period last year.
“The good 2016/7 rainfall season coupled with the introduction of the economical yet efficient Massey Ferguson 300 series boosted the business unit’s performance.”
Implement sales grew by 58% in the first four months, however service hours were 8% below last year mainly due low activity in the lowveld.
The sales of Perkins power generator units continued to slow down with a 7% decline being registered on the back of very good power availability from ZESA. Perkins part sales were strong with service hours improving by 20% mainly due to improved customer engagement.
At CT Bolts, the incessant rains negatively affected operations in the mining sector, a key market for the business unit. Consequently volumes for mild steel fasteners for the first four months were down 14%. The high tensile bolts improved by 3%.
The business expects improvement in working capital availability in the second half of 2017 mainly as a result of the company’s gearing that has been reduced with a medium term loan which will be paid off in July 2017.
Going forward, in addition to the ongoing restructuring, the group will focus on a disciplined and anticipatory approach to procurement, a focus on culture productivity and performance which resulted in higher service hours per technician