ZIMPLOW Ltd managing director Antony Rowland says the company’s June year-end results will be “pleasing” helped mainly by a significant increase in export sales volume over the last six month
He however says inflation, currently at 300,1% could hamper higher prospects.
Export volumes increased by about 20% compared to last year driven mainly by the company’s forays into the regional market.
Rowland said: “The export volumes have firmed, especially in Namibia, Zambia and Angola. The whole of East Africa has been kind to us in terms of volumes and there is potential for further sales growth in those countries.”
He said export volumes of animal-drawn implements had firmed 100% over the last two years and company expectations were to add another 60% growth in the next two years.
Rowland said this was because the group would be exploring new markets in Uganda, Kenya and the Democratic Republic of the Congo.
Domestic sales volumes of farming implements had however plunged by 40% during the last season due to the fast-track land reform programme.
Rowland said the downturn in the domestic market could be attributed to land reform and the prevailing poor economic climate.
He said the drop in local sales was also due to the competitive market activity.
Rowland said the local market activity had seen Zimplow lose some of its market share to Hastt, which specialises in the same product range.
The company expects the stagnation in the domestic market to continue for the next season but was confident this would not dent its earnings per share.
Rowland said because of the high inflation, which had pushed up the price of new implements, Zimplow had witnessed increased sales volumes of spares as farmers opt to repair instead of replacing their implements.
“There has been a significant jump in the spares business over the last season,” Rowland said. “It has become too expensive to replace the implements. The ever-rising price of new animal-drawn implements has probably pushed the prices beyond the reach of most new farmers.”
Zimplow has invested heavily in steel stocks to cushion itself against soaring inflation.
The company usually experiences a slightly weaker second half owing to the seasonal aspect of its business.
Businessdigest gathered an average of $6,14 per share from five analysts and a range of between $5,92 and $6,20 per share.
Zimplow shares traded at $25 on Wednesday.