HomeBusiness DigestMixed fortunes for ZSE counters

Mixed fortunes for ZSE counters

Roadwin Chirara/Eric Chiriga

LOCALLY listed companies last week released a set of results which largely indicated mixed fortunes in an economy that went through a stormy period last year, analysts have said.


Some of the firms that released their set of results included Murray & Roberts, Interfresh and Innscor Africa.


Analysts said the current trend had mainly been influenced by the continued failure of listed companies to adjust to the economic challenges facing the country.


One analyst said the results were mainly a reflection of the current business environment.


“In the current economic environment, most companies were bound to face some challenges, but some were far below market expectations,” he said.

He said despite the increase in turnover for diversified food and distribution company Innscor Africa by 288%, its regional operations had failed to contribute significantly to its earnings.


“Innscor was disappointing considering its vast business interests and if you look at it, its acquisition influenced its growth in turnover,” he said.


He said the company was likely trying to downplay its regional operation.

“Innscor is downplaying things for reasons best known to themselves, but politics is likely to have an effect on the company’s position,” he said.


He said other counters such as Murray & Roberts had recorded losses mainly because of their diversification into the horticultural sector which is currently struggling because of the current exchange rate and loss of markets.


“It was a good idea then to diversify as a company, especially into the horticultural sector, but M & R are now feeling the impact of the problems in that particular sector,” said the analyst.


He said the company’s new contract for its Bonnazim operations was likely to put it on a recovery path. He however noted that this was likely to be felt in the long-term.


“The new contract for the European market is a good development but it should be noted that the results would only reflect in the long-term,” he said.


An investment analyst with Old Mutual, Artwell Musabayana, however said the performance of financial counters was in line with the challenges facing the sector.


He said companies such as Barclays had performed well compared to the previous year’s results considering the new challenges in the economy.


He said bigger institutions are likely to produce better results compared to small counters mainly because of the sizes of their investments and operations.


“In comparison we would find bigger counters having better results. This is mainly determined by many factors,” said Musabayana.


He said Barclays had managed to reduce its operational costs by reducing its branch network, a decision that has worked in its favour.


Another analyst said export-oriented companies such Interfresh are likely to struggle for survival as the exchange rate has continued to work against their operations.


He said the export incentives recently introduced by the central bank were likely to offer a reprieve to export operations.


He however said there was an urgent need for the Reserve Bank to review the current exchange in line with its economic recovery strategy, adding that on a comparative basis the operating environment had slightly improved when compared to the previous years.


“The export rate has been a cause for concern for most exporting companies and this is evident in reduced earnings from exports,” he said.

Although the monetary policy measures have impacted positively on the economy, export viability remains a challenge, horticulture concern Interfresh Ltd, has conceded.


“The business environment within which the group operates is expected to remain challenging,” Lishon Chipango, the chairman of Interfresh said.

He said benefits from the monetary policy measures, particularly declining interest rates and inflation, would greatly assist businesses but export feasibility continues to be of great concern.


Chipango added that the uncertainty regarding Mazoe Citrus Estates persists despite ongoing dialogue and legal processes.


“Mazoe Citrus Estates remains dogged by the uncertainty of listing for resettlement purposes and as a consequence there is a potential risk of disruption to our citrus production,” he said.


At least 88% of Mazoe Citrus Estates was listed for resettlement while farmers have already been resettled on 46% of the land.


Chipango said the uncertainty does not allow the estate to maximise its full potential.


“Future projects which include the expansion of citrus hectarage and the construction of a 10 000ML (megalitres) dam, have been put on hold.”

The group’s citrus export volumes out of Interspan, Citrifresh Exports, Citripack Chegutu and citrus projects declined by 10% year-on-year.

Interfresh is the holding company of Mazoe Flowers, Intercrop, Citrifresh Exports, Marlon Trading, Wholesale Fruiterers and Smithfield Flowers.


The group recorded a turnover of $223 billion for the year ended December 31 2004, a growth of 156% from the previous year.

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