An 82% reduction in finance costs, improved margins and a reduction in operating expenses helped Zimplow Ltd return to profitability in the interim period to June.
By Chris Muronzi
In a statement attached to the company’s interim financial results to June, chief executive Mark Hulett says the company is in a much better position compared to the same period last year.
The group’s turnover improved significantly to US$14,7 million buoyed by strong domestic sales volumes and improved exports from US$8,2 million, a 57% jump from last year driven by government’s command agriculture exercise.
Domestic sales rose to US$12,5 million from US$8 million in the same period last year, representing growth of 64% in the same period a year ago.
Export sales shot to US$2 million from US$201 938. Profit before interest and tax stood at US$373 632 from US$2 million loss a year ago. Finance costs of US$115 834 ate into the bottom line, leaving a net profit of US$262 737.
Trading volumes for animal drawn implements in the period under review rose 37% driven by export orders, management said.
Volumes of exported implements grew by 1445% while local sales were up 103%.
“The division adopted and implemented a lean production system focused on eliminating inefficiencies which saw the business unit achieving factory savings above expectation,” Hulett said.
At Barzem, a backlog of foreign payments affected the company’s ability to supply products to customers, he said.
“However, interventions and support from the central bank unlocked the bottleneck for a period, placing the business right back on the right track,” Hulett said.
Growth in mining and energy sectors lifted sales 550% in the comparative period.
“The renewed interest in CAT equipment in the Hwange Coal fields, backed by the turnaround efforts at Hwange colliery and the refurbishment of ZPC thermal power station are a welcome development with key customers now engaging in fleet maintaincence and wholegoods replacement. With adequate support from the central bank, the unit is geared to deliver on key government backed projects such as the Harare-Beitbridge highway that are on the pipeline for the second half.”
Hulet said sales at Farmec rose 85% compared to the same period last year, powered by strong sales of Massey Ferguson tractors.
He added that sales of the Perkins powered generator units continued to grow with a 63% increase compared to the same period last year. Rationalisation efforts at CT Bolts helped return the company to profitability.
The company had USS$8 million worth of inventory. Hulet was optimistic medium term bank borrowing would be extinguished this month.