MURRAY & Roberts (Zimbabwe) Ltd (M&R) turnover rose 435% to $30 billion after a massive restructuring programme, which witnessed the reduction of divisions, compa
ny chairman Paddy Zhanda said in the M&R annual report.
The group is a major player in the industrial and construction sectors.
In all levels of operation and financial performance, the group achieved real growth on an inflation-adjusted basis.
Turnover increased 62% to $57 billion and attributable earnings rose 140% to $4,88 billion.
The return on ordinary shareholders’ equity, at year-end, rose to 38% from 22%.
Zhanda said the results for the period ended September 3 reflected the continued successful development of the group based on the initiatives begun last year.
“The performance of the group has been exemplary and in all financial measurements and operational aspects real growth has been achieved,” Zhanda said in his report.
“Turnover rose 435% to $30 billion, operating margins improved to 32%, attributable earnings were 668% up at $7 billion resulting in earnings per share of $34,41.”
The chairman said the restructuring of the operations into four clusters – agro-industrial, contracting, manufacturing and trading, properties and treasury and head office combined, had ensured specific managerial focus in the different areas of operations.
“The challenges of the past year have been exceptional and have placed our senior management team and their staff in extraordinary circumstances and required them to operate in an extremely stressful and unconventional business environment,” Zhanda said.
“Their dedication and enthusiasm is recognised and appreciated.”
He said the country’s poor macro-economic environment had affected business within the group like it has in all other sectors of the country’s economy.
“Inevitably, the downward trend of the macro-economic fundamentals established in recent years has continued and the deterioration has accelerated in 2003,” Zhanda said.
“Economic activity in all areas of the economy is declining under the burden of flawed economic policies. The country has faced increased international isolation, which has resulted in the cessation of all donor support and foreign capital inflows. The severe foreign currency shortages have resulted in significant disruptions to the economy causing shortages of fuel and other essential commodities.”
The chairman said the more recent critical shortages of local currency bank notes was impacting on productivity.
“The policy of maintaining artificially low interest rates has entrenched a culture of consumptive spending which sustains the inflationary expectations in the economy,” Zhanda said.
“This has decimated savings and all but eliminated any infrastructure investment, so necessary to create employment and sustain future growth.”
He said during the period under review, there was a strong focus on export performance and foreign currency generation in all clusters had ensured that the group was a net foreign currency generator.
“This is a commendable performance given the generally hostile commercial attitude to Zimbabwe, both internationally and regionally,” Zhanda said.
“There was strong cash generation over the year with cash balances increasing by $2 205 million. A substantial capital expenditure programme was implemented in which $1 791 million was invested to maintain and expand capacity.”
He said certain non-core assets were sold realising $413 million.
Working capital, on the other hand, increased by $5 777 million because of the effect of inflation on stock and debtors as well as a decision to increase strategic stocks and at the same time settle foreign liabilities in advance.
“The balance sheet remains strong, with minimal gearing, and provides a solid platform for future expansion,” Zhanda said.
“Numerous new ventures are being evaluated to ensure they comply with the strict commercial and financial investment criteria established by the board.”