Masimba Holdings Ltd has expressed concern over lack of foreign currency to import critical raw materials required to sustain operations of the company.
The firm posted an after-tax profit of US$507 055 for the year ended December 2016 (FY16) from a loss of US$158 114 end of 2015 (FY15). The manufacturing concern said the business environment continued on a downward trajectory characterised by shortages of foreign currency, subdued domestic demand and tightening liquidity conditions.
“The shortage of foreign currency in the market, emanating from a weak trade account, negatively impacted on the group’s plant modernisation, material procurement and order book growth strategies,” Masimba chairman Gregory Sebborn said in a statement.
“Reinforcing Steel Contractors Zimbabwe contributed a profit of US$22 687 up from US$12 715 in 2015.”
Sebborn said operations of the company were negatively affected by shortages of foreign currency, a major source of raw materials.
Masimba chief executive Canada Malunga said foreign currency shortages were a huge headache for the company, adding that they engaged banks to get them to appreciate their role in the export value chain.
“What we do is to make sure that banks understand our position. So we take our banks through the projects we do. We also get them to meet our clients. Most of our clients are exporters, so that chain needs to be interrelated. When we lobby to the Reserve Bank of Zimbabwe, we demonstrate that the services we are providing will improve exports,” he said.
Confederation of Zimbabwe Industries has been concerned about banks’ priority of non-essential goods ahead of raw materials when allocating payments for international settlements.
The group’s revenue increased by 91% to US$19,1 million FY16 up from US$10 million FY15, largely driven by a surge in civil engineering and building projects funded by the private sector and non-governmental organisations. EBIDTA improved to US$1,7 million in FY16 from US$245 467 in FY15.
During the period, US$1,9 million was invested in plant and equipment, up from US$210 896 FY15, in order to position the business for the prevailing and anticipated opportunities. Capital expenditure was financed through a combination of internal resources and external borrowings.
Masimba Holdings Ltd said the current state of the country’s infrastructure, spanning across the company’s key markets, presents growth opportunities in the short to medium-term, subject to the availability of external funding.
However, government’s participation in terms of infrastructural development remains particularly low owing to funding constraints, the company said. In addition, the business has a stronger order book and is accordingly projecting an improved performance in 2017.
The current political and economic uncertainties, however, remain a cause for concern, the company also said. Masimba Holdings Ltd is involved in civil engineering and building contracting, structural steel fabrication and property development.