STEELNET (Zimbabwe) Ltd, a major player in the construction industry, says significant net financing costs of $9,2 billion were incurred funding the group’s strategic stock holding of imported s
teel raw material.
Steelnet came into existence on July 1 2002 as a result of the TH Zimbabwe Ltd demerger.
It is currently capitalised to the tune of $30,1 billion on the Zimbabwe Stock Exchange.
Steelnet falls under the Shabanie and Mashava Mines (SMM) Holdings empire and exports steel items to South Africa, Malawi and Zambia.
Total group volumes improved by 6,5% as a result of improved export performance.
However local demand declined significantly in 2004 as customers realign to the new environment brought about by the monetary policy statement.
Steelnet chairman Hillary Munyati told shareholders in his audited financial results for the year ended December 31 that the economic environment during the period under review continued to be characterized by spiralling inflation, declining gross domestic product, critical foreign currency shortages and an unprecedented rise in interest rates in the closing weeks of the financial year.
In inflation-adjusted terms turnover for the year increased by 49% to reach $133,8 billion. The inflation-adjusted finance cost of $20,8 billion was significant in the decline of attributable profit to $6,6 billion. In historical terms group turnover increased by 637% to reach $58 billion for the year.
Munyati said much progress was made into regional markets with export volumes increasing by 36% on 2002.
“Significant net financing costs of $9,2 billion were incurred in funding the group’s strategic stock holding of imported steel raw material,” Munyati said. “Attributable profit rose 569% to $13,8 billion, resulting in a basic earnings per share of $27,02.”
The chairman said turnover at Tube & Pipe Industries (TPI) had increased by 633% to reach $41 billion for the year. Export pipe volumes accounted for 40% of total pipes sold.
“While volumes are up in each of the neighbouring markets, the growth of mining related pipes into South Africa has been the most significant new development,” Munyati said. “Tube and Pipe Industrial continued to grow its local market share of galvanised metal roofing sheets and successfully introduced steel section to its trading range.”