DIVERSIFIED industrial company Murray & Roberts (M&R) has disposed of its agro-business unit to the Industrial Development Corporation (IDC) for an undisclosed amount, it was revealed this week.
M&R completed the transaction of i
ts agro-business unit, Bonnezim, based in Chegutu, to the IDC in June.
M&R is in the process of shedding its non-core agro operations to concentrate on the construction business.
Announcing the company’s full year results, M&R chairman, Paddington Zhanda, said that Bonnezim had been disposed of at a profit of $14 million.
He did not give the value of the transaction.
“The group disposed of its entire interest in the agro-processing division in order to concentrate on its core competence of manufacturing of construction and infrastructure materials,” Zhanda said.
Bonnezim is currently exporting fresh produce to a number of international markets.
Businessdigest is informed the IDC will use Bonnezim as the vehicle for the revival of the multi-billion dollar Kondozi estate project, which collapsed after the farm’s take-over by government two years ago.
The revival of Kondozi estate has been put as one of government priority projects under the National Economic Development Priority Programme (NEDPP). IDC, a government-owned company, has been granted the authority to implement the revival of Kondozi.
Zhanda announced that the group had embarked on an expansion programme that would see the company take advantage of opportunities in Malawi, Mozambique and Zambia to increase earnings and operational capacity.
“Efforts are already underway to increase our operating capacity by taking advantage of opportunities in Malawi, Mozambique and Zambia,” Zhanda said.
M&R’s capacity utilisation had been low due to depressed demand and non-availability of key inputs in the country during the interim period to June.
Volumes across the group dropped from last year although there was an improvement in margins.
The construction industry has been operating below capacity over the past two years because of escalating building material costs due to rising inflation.
Zhanda said the group had started the current year with a strong order book and is expected to contribute significantly to its expansion programme which is expected to translate into more earnings and a solid cashflow position.
The period under review saw earnings increasing by 2 533% to $325,93 million against a profit after tax of $14,28 million recorded in June 2005.
Construction operations recorded a turnover of $570 million and earnings before tax of $78 million.
Basic earnings per share improved to 182 cents from 7 cents recorded in the prior year. This was within the range of analysts’ estimates of 168 cents.
During the period under review, M&R’s turnover rose to $1,59 billion, from $225,5 million recorded the previous year.
“The cash generation was better for the second half and the company’s divisions contributed solidly to the group’s cash position,” said Zhanda.
Despite some recovery in the construction industry, Proplastics’ performance in the second half was below budget due the macroeconomic effects on demand.
The manufacturing business accounted for 63% of turnover at $1 billion, resulting in corresponding earnings before taxation of $290 million.
The company said performance in the manufacturing sector would continue to be built around agriculture, refurbishment and expansion of the water and sewer reticulation systems.