HomeBusiness DigestFuture uncertain for Radar Holdings

Future uncertain for Radar Holdings

Eric Chiriga

RADAR Holdings (Private) Ltd says it is extremely difficult to forecast next year’s performance due to the highly-volatile economic environment.

al, Helvetica, sans-serif”>The company also said that the contributions it realised from its exports could have been higher if the exchange rate during the financial year was determined by market forces.

“Though exports contributed 31% of the group’s revenue,” Kenneth Schofield, the chairman of Radar said, “this could have been higher if the realised exchange rate during the year was closer to the market rate.”

Schofield said the unpredictability of interest rates, foreign currency availability and exchange rate volatility were particularly disturbing for the group.

He said the group’s interest bill for the year ended June 30 increased by 223% to $49 billion from $15 billion last year, as they failed to access any financing at concessionary rates.

“During the year the group did not access any concessionary Productive Sector Finance or any other export support facilities on the market,” he said.

“The high interest rates will severely impact on the future profitability of the group. Therefore, the group is working on reducing borrowings in the shortest possible future,” Schofield said.

Despite the introduction of the auction system by the Reserve Bank of Zimbabwe, foreign currency remains scarce.

More than 60% of foreign currency earned is used to import basic necessities like electricity and fuel, and only a maximum of US$12,5 million per week is left for the whole country on the auction.

The disparity between the auction and the parallel market rates continues to widen. The group’s operating profits increased by 328% but Schofield said high interest rates eroded margins.

Radar’s profit after tax for the year ended June decreased by 56% to $7,3 billion from $16,6 billion the previous year.

Radar is the holding company of United Builders Merchants (UBM), McDonald Bricks, Bulawayo Toyota and Border Timbers.

At UBM, Schofield said the shortage of foreign currency continues to be a problem and consequently, procurement of imported products has been negatively affected.

“Sales at Bulawayo Toyota have been adversely affected by the late delivery of a new pick-up range and the unavailability of foreign currency also affected the procurement of spare parts,” Schofield said.

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