Zimplow Holdings Limited CEO Zondi Kumwenda
Zimplow’s mining and infrastructure operating unit, Barzem, is expected to return the Group to profitability and turn around the group’s fortunes going forward.
The CEO of Zimplow Holdings Limited Mr Zondi Kumwenda revealed this in a recent interview with AfricanSENS soon after the release of the group’s financial results for the year ended 31 December 2015.
“In terms of profitability going forward,” he said, “Zimplow is striving to make its profit through Barzem as it has recently shown signs of good performance.”
Kumwenda also mentioned that Mealiebrand, which is Zimplow’s best performing brand, posted a profit during the 2014 reporting period compared to the group’s other operating units, and said that Zimplow is bullish about Mealiebrand’s performance in the next financial year, adding that the Group will continue to build on exports in order to counter the potential low local demand in the 2015 financial year.
“The significant orders that have so far been received on animal drawn implements are encouraging,” he said.
Zimplow reported a US$2,4 million loss for the period ended 31 December 2014, and Mr Kumwenda has attributed the loss for the year to the one-off US$1,9 million provisions and impairments which he said contributed significantly to Zimplow’s loss for the year.
Kumwenda said other non-cash items such as impairment of $745,000 on the investment property due to the depressed property market, and loss of US$300,000 on disposal of a building which had been initially valued at US$3,5 million but sold for US$3,2 million, were other contributors to the loss during the period.
“We expect a positive turnaround to the group as the revenue trend on the agricultural side is looking positive, and volume and dollar trends compared to the last two years show that we are heading in the right direction; and market share in terms of agriculture is positive,” said Kumwenda.
“The agricultural season did not have a significant impact on the second half of 2014, however the impact of the drought period will affect the 2015 financial year. The government’s agricultural input scheme was not entirely successful in 2014 compared to 2013, and overall, there was a 1% increase in the local implements market for Mealiebrand as well as an increase for Farmec; but the biggest challenge presently is to maintain the margins and reduce overheads to focus on profitability,” he added.
Commenting on the export market, he said that the pressures in the export market were mainly on margins as the majority of exports in these markets are generally lower priced compared to the local market, therefore Zimplow encountered a sacrifice on its margins, though the volumes on exports grew by 11% in the 2014 financial year.
“Our biggest problem during the year was on borrowings and, coupled with falling margins and revenues, as well as stubborn overheads our results were negatively impacted.
“Our major goal for 2014 to reduce borrowings was achieved through the disposal of the investment property, as well as the successful US$5 million capital raise which enabled Zimplow to reduce its legacy debt and we are confident because Zimplow’s borrowing position is much better, and the aim is to reduce the debt further by developing new models of matching long term cash with long terms assets,” he concluded.
Zimplow, which is listed in the Engineering sector of the Zimbabwe Stock Exchange, currently has a market capitalisation of US$18 million.
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