PG Industries Zimbabwe will dispose of its non-core properties with a book value of US$5,1 million to raise working capital, reduce costs and narrow losses, CEO Hillary Munyati has said.
Report by Gamma Mudarikiri
Munyati said this would be coupled with the disposal of the remaining investment in Manica Board and Doors (MBD) with a combined value of US$4,35 million.
This follows the conclusion of the recapitalisation of MBD at the beginning of the year, resulting in the group’s shareholding reducing to 27,9% from 60%.
Munyati said as part of cost cutting measures, the company would reduce its branch network, relocate its head office currently located along Seke road to its complex in Telford road while PG Timbers and PG-Glass would share the same property beginning next year.
The group recently established a transaction funding relationship which will provide access to import of products worth US$2,1 million, while a Memorandum of Understanding has been signed to enter into a long-term Business Process Outsourcing arrangement to increase credit limit to US$4 million.
“This relationship will go a long way in resolving the longstanding challenges of properly restocking PG Merchandise Limited and Plate Glass company of Zimbabwe,” said Munyati.
In the half-year ended June 30 2012, the company reduced its staff to 614 from 1 271 as part of its cost reduction strategy.
In the period, the group recorded a 16% slump in revenue to US$15,2 million partly attributed to non-consolidation of MBD results and decline in merchandising division volumes.
The group narrowed its loss after taxation to US$2,7 million compared to US$3,1 million recorded in the comparative period.
Performance was weighed down by low merchandising sales volumes and high interest burden, the company said.
The merchandising division comprises PG Building Suppliers, PG Timbers and PG Mozambique operations. Gross sales in the division declined 12% to US$10,5 million during the period.
The division however contributed 69% to the group’s sales.
The concrete division contributed US$3,5 million to group revenue, marginally improving from the US$3,4 million recorded in the previous year.
Zimtile tiles sales volumes grew to 1,6 million in the period compared to 1 million the previous year, while bricks and pavers volumes grew to 2,7 million from 1,3 million in the same period helped by the installation of a new production plant in the division.
Cost of production dropped 0,55 UScents per tonne compared to 0,95UScents per tonne recorded in the same period.
However concrete roof tiles prices trended downwards, dropping to US$1,05 in the second quarter of this year compared to US$1,30 in the first quarter.
The division recorded a gross profit of US$868 000 compared to US$551 000 recorded in the comparative period.
PG glass division sales volumes did not move at US$1,2 million, while gross profit marginally dropped to US$472 000 from US$552 000 recorded in the prior period.
Zimtile, Plate Glass, PG Timbers and PG Mozambique have projected operating profits in the second half. However, Munyati said this would not offset the group’s incurred loss.