HomeNewsZSE drags TA Holdings down

ZSE drags TA Holdings down


TA Holdings Limited’s local investment income slumped by 96,6% in the first half of the year, as stocks crashed following a panicky sell-off that hit the local bourse in March owing to uncertainties over indigenisation regulations when they were first publicly pronounced during the month.
The downtrend continued until June 30, eroding the Zimbabwe Stock Exchange (ZSE) of 12% of its market capitalisation.
TA’s income from its various portfolio investments on the ZSE declined steeply to $34 413 from $1 million during the comparable six months.
“In looking at investment income, it is important to take note of where the investment income is coming from. The ZSE didn’t perform well in the first half of the year,” Bothwell Najeka, TA chief financial officer, said.
“Insurance companies make up the bulk of the portfolio invested on the ZSE.”
Last year, the investment company announced it had discarded its pre-dollarisation “hedge” investment model for a growth model by offloading portfolio positions in stable counters such as Old Mutual and investing in dynamic, high-growth counters.
In contrast, investment income from operations outside Zimbabwe recovered from a loss position of $1 million to a profit position of an equal value.
The investment company confirmed Sable Chemical Industries, its 51%-controlled local agrochemical division, carries the fortunes of the investment company this year, as its portfolio of Zimbabwean operations gradually fight back to profitability.
For the first half of the year, all of TA’s local subsidiaries weighed on group earnings, but reported a systematic reduction in operating losses.
Group earnings bounced back from a loss position of $3,4 million last year to a marginal profit after tax of $170 000, led by operations outside Zimbabwe whose after-tax profit surged to $1,8 million from $261 560 the previous year.
Aggregate operating loss by Zimbabwe companies dropped to $760 289 from $1,2 million in the first half of last year. Loss after tax also contracted by nearly 100% to $1,6 million from $3,7 million.
“For the rest of the year, I think we’ll continue reducing the loss,” Nyajeka said. “We’re going to depend largely on fortunes at Sable. Hotels are also promising.”
Last year, Sable – the country’s sole manufacturer of nitrogenous fertiliser – posted a loss of $4 million and contributed the bulk of TA’s loss.
But capacity utilisation at the Kwekwe-based company has increased to 36% from 18% at the end of last year, boosted by phased capital investments.
TA and other Sable shareholders plan to invest $45 million into the firm, in equal tranches over four years to nurse it back to profitability.
The diversified investment company has also announced it will spend $10 million on its hotels division to boost room rates and occupancies.

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