Hunyani back in the game

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Hunyani Holdings, Zimbabwe’s largest listed printing and packaging company, tasted its first profit under “dollarisation” in the first six months of its financial year to April 30 after both revenue and operating profit nearly doubled compared to the same period last year.
Revenue increased 90% to $16 million from $9 million in 2009 as all stocks sold out, lifting the company to an operating profit of $665 486 from a loss of $159 325 in 2009, as local volumes increased with the improvement in the operation environment.
However, exports declined as demand in external markets came under pressure from poor liquidity and a persistent credit crunch arising from two years of global economic downturn.
During the review period, volumes and margins at Hunyani’s key operations — Corrugated Products, Forest Estates and Forest Product and Flexible Products —improved, propelling the group to a pre-tax profit of $489 807 against a loss of $189 300 in the first half of 2009.
Margins rose as the company achieved economies of scale from improved capacity utilisation, which hit 50% after systematic investments in plant and equipment funded internally from asset disposals and externally through borrowings.
The group discontinued Hunyani Flexible Products and channeled the $1,2 million proceeds towards refurbishment projects, currently underway.
The sale resulted in the shut- down of all the laminating and printing activities of the company.
“We are going to invest in new equipment at our Hunyani Flexible Products Division were there are attractive market opportunities,” Wellington Dangarembizi, business development manager of Hunyani Holdings said. “The disposing of non-core operation is an ongoing exercise and we have so far made some significant progress in this regard.”
Borrowings by the group increased to $3,1 million from $1,6 million the previous year as working capital requirements increased in step with increased demand, firming margins and improved capacity utilisation.
Hunyani’s balance sheet also strengthened to $37 million from $22 milion.
However, the diversified manufacturer has had to postpone the opening of its paper manufacturing plant in, currently under care and maintenance, arguing market conditions are still not conducive to resume operations.
Dangarembizi also said Hunyani would no longer install standby generators at their plants as initially announced, opting to consider other ways of going around the issue of power cuts constantly disrupting production processes.
He added that, the firm would recapitalise Printopak, its printing and packaging division, in the second half of the year to increase volumes and lower per unit production costs after the division performed below expectations due to the stiff competition and poor plant uptimes.