PG Industries Ltd chief executive officer Gerald Mujaji says South Africa’s hosting of the 2010 soccer World Cup should generate considerable regional construction likely to boost his company
He says regional markets of Malawi, Botswana and South Africa have continued to firm and order books there are healthy.
Several Zimbabwean firms are already eyeing business prospects in neighbouring South Africa since the country was given the go-ahead to host the 2010 soccer World Cup.
One such firm is ZimSun Leisure group led by hotelier Shingai Munyeza.
South Africa is Zimbabwe’s largest trading partner.
In his report for the year ended December 31 2003, Mujaji said events during the first quarter of the year had left everyone in no doubt that the commercial environment in Zimbabwe would continue to be both difficult and unpredictable.
“Analysis of local conditions and trends in particular in the construction industry shows a marginal improvement in demand during March, April and May and we expect this recovery to continue,” he said.
“The regional markets of Malawi, Botswana and South Africa have continued to be firm and order books there are healthy. Of note is the fact that South Africa has won the 2010 soccer World Cup bid, which should generate considerable regional development and construction. These trends demonstrate that PG Industries will continue to enjoy demand for its products to ensure profitability into the future.”
Group turnover at the diversified but mainly construction firm increased from $23,8 billion to $172,4 billion.
Mujaji said the group’s results reflect the different responses registered by its three newly created subsidiaries – PG Merchandising, Plate Glass Company and Zimboard Products – to the environmental changes.
Export sales grew by 561% to close the year at $44,2 billion. Exports contributed 26% to total group turnover.
The resultant profit before interest was $34,7 billion compared to $6,2 billion for the previous year.
PG chairman Enos Chiura said a combination of the significant slowdown in demand, seasonally high inventories and high interest rates in the last quarter resulted in an interest bill of $21,6 billion for the year compared to $419 million for the prior year.
“While the group managed to convert approximately 70% of its borrowings to cheaper productive sector funding, the remainder was at substantially higher market rates,” Chiura said. “We still await response on applications to convert the remaining 30% to productive sector funding.”
The bulk of PG’s trading activities are housed in PG Merchandising.
Turnover rose to $113,4 billion from $14,1 billion in the prior year.
Operating income was $20,9 billion compared to $2,8 billion in the prior year.
On July 1 last year the group acquired 70% of Gestapo Investments (Pvt) Ltd, trading as Zimtile, for $4,21 billion.
Zimtile is a manufacturer and distributor of roof tiles, bricks and precast walling and was successfully integrated into the PG Merchandising portfolio.
Earlier in the year, the group had acquired the assets of Masasa Timbers (Pvt) Ltd to complement its PG Timbers business in Harare.
Mujaji said PG Timbers results were complemented by the introduction of the newly acquired Masasa Timbers production facilities, which provided some key new products such as its “doors of distinction” range and top quality roof trusses.
PG Creative Paints, a new business, added automotive paint to its product range, further strengthening this brand to the extent that it was decided to roll out a “store within a store” concept in all PG outlets in Zimbabwe and paint had now become a core product for the group, Mujaji said.
He said PG Safety Glass enjoyed strong demand both locally and in its export markets.
Year-on-year local market volumes rose by 47% during the first three quarters of the year.
“South African and American markets were firm and with export volumes expected to grow, an expansion of its curved glass capacity by 50% was successfully completed to meet demand,” Mujaji said.