HomeBusiness DigestBonnezim reels, posts $12b loss

Bonnezim reels, posts $12b loss

Roadwin Chirara

MURRAY & Roberts’ agro-division Bonnezim has recorded a loss before tax of $12 billion, according to the conglomerate’s half-year results.



ial, Helvetica, sans-serif”>The division made losses again in the same period last year. The business unit had hoped to earn income from a three million euro supply contract for sweet chilies, but failed to generate sufficient revenues.


M&R blamed the exchange rate regime in the first half of the year and increased operational costs for the division’s poor performance.


M&R chairman Paddy Zhanda said the unit had focused its products on the domestic rather than the export markets. He said the group had managed to sustain the operations of the unit through borrowings and some revenue from local sales.


“A contract for the marketing of sweet chillies was signed in February but this did not yield any meaningful results,” Zhanda said.


“The division generated its cashflows from selling horticultural products to the local market and through group borrowings,” he said.


“Negotiations for the realignment of agro-processing companies have reached an advanced stage and an announcement will be made to shareholders in the near future,” Zhanda said.


Despite its limping division, the other unit in the company performed well.

Zhanda said the group’s manufacturing business recorded an increase in growth, which was however offset by the increase in international oil prices, which hit raw material imports.


“The high international oil prices from which PVC resin is derived, meant that the cost of the main raw material, PVC, increased substantially in US dollar terms,” said Zhanda.


The manufacturing business recorded a turnover of $107 billion, a figure which the company said was likely to increase after it commissions a new extrusion plant in the coming year.


M&R construction business recorded a turnover of $96 billion and earnings before tax of $4,5 billion during the period under review.


“Consolidation of the division was embarked on and completed during the year, making it lean and prepared for the challenges in the year,” said Zhanda.


He said the construction business had been awarded contracts which were likely to contribute to its income in the coming financial year.


“A number of significant contracts were awarded towards the end of the year and these are expected to contribute significantly to the division’s profitability and cashflow in the new financial year,” Zhanda said.


The group recorded an increase in turnover of 99% to close the first half at $225 billion while its overheads increased by 137%.


The group’s earnings before tax increased by 34% to $20,3 billion while net interest charges closed at $1,3 billion as a result of the group’s solid cash position.


M&R generated a net cash inflow of $11 billion and net cash resources of $16 billion while its capital expenditure for the year closed at $11 billion.

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