Agricultural infrastructural and mining equipment group Zimplow’s loss widened by 5,9% to US$1,8 million for the six months to June 2015 compared to the same period last year.
The company’s recently published unaudited interim results show that revenues also tumbled by 11% after the agricultural units recorded a 24% decrease in turnover as a result of a massive downturn at the company’s Mealie Brand division.
Margins on agricultural units were heavily affected by the poor performance of Mealie Brand, and price wars among players in the tractor industry.
Net operating costs were down by 7%, but the company said this could have been as much as 14% had it not been for provisions for doubtful debts and obsolete stock included in net operating expenses.
The losses recorded at Mealie Brand and an additional provision resulted in an operating loss in the interim period.
The group successfully raised US$5 million which has been allocated, together with the proceeds from property sales towards the retirement of short-term debt.
The company said it was undertaking initiatives to continue reducing and eventually eliminate debt.
Total implement volumes at Mealie Brand went down by 44% compared to the same period last year. Both local and export volumes recorded huge declines at 43% and 45% respectively, the company said.
“The disappointing performance of Mealie Brand volumes were attributed to the erratic rainy season, poor preparation by grain farmers because of lack of funding, Grain Marketing board did not pay on time, low and depressed tobacco prices and volumes, reduced cotton crop as well as very low pricing, and general liquidity constraints within the economy,” said Zimplow.
On the export front, the region has been severely affected by the strengthening of the United States dollar and falling commodity prices in general, and a sharp decline in oil prices.
Total spares were down by 54% compared to the similar period last year.The company said while exports of spares increased by 12%, the increase was heavily weighed down by a 63% decrease in local part sales.
Similar trends were experienced at Zimplow subsidiary African Trade and Associated Technologies with implements and spares decreasing by 16% and 37% respectively.
Combined volumes of generator sets and tractors increased by 4% over the same period last year. Market share for tractors up to the end of June stood at 28%.
Zimplow subsidiary Barzem Enterprises were 29% ahead of last year mainly because of a surge in lift truck sales.
Farmec Zimbabwe subsidiary power generation units were 36% above last year’s achievement whereas service hours at Barzem recorded a 100% increase over last year.
“The group had anticipated that he export orders secured from Angola would have been dispatched by now. However, the negative effects of the low oil prices are being seriously felt in Angola as the country struggles to obtain foreign currency. It is hoped that the position will improve in the second half of the year. Barzem regional skills export contract will continue in the second half and this will sustain this business which more than likely is going to post a positive result by year end,” Zimplow said.