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Masimba records $60 000 loss

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MASIMBA Holdings Limited has recorded a loss of $60 000 for the 18 months ended December 31 2013.

MASIMBA Holdings Limited has recorded a loss of $60 000 for the 18 months ended December 31 2013 compared to $503 000 for the period ended June 30 2012 due to lack of funding for projects in the construction sector.

Tarisai Mandizha

In the period under review revenue increased by 45% to $62,3 million. T

he construction sector contributed $39,9 million from $26,9 million in 2012 while manufacturing contributed $22,3 million from $16,1 million in 2012.

Speaking at the company’s analyst briefing in Harare yesterday, Masimba Holdings chief executive Canada Malunga said the economic environment during the period under review, has however, been characterised by stifling liquidity problems, which affected most of the key drivers in the economy.

“As the cash squeeze has progressively tightened particularly in the last six months of the reporting period, funding for construction activity has diminished and large projects were few and far between,” Malunga said.

“The profile in the construction sector has shifted to smaller scale projects and consequently, a larger number of these smaller projects are being run at any one time in order to operate at a profitable level of activity.”

He, however, said the decline in revenue for the company was due to liquidity challenges towards post-elections, lack of funding for government projects and reduced aid funding for water and sanitation projects.

“This is a commendable achievement under the challenging conditions. The group has experienced noticeable decline in monthly revenue since the elections which has been a result of liquidity constraints,” he said.

He said the group achieved higher gross profit margins of 17% compared to 15% on the last reporting period driven by a major drive for efficiencies undertaken during the period.

The very low margins in construction, Malunga said, was due to stiff competition for contracts.

In the period under review earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $3,9 million was recorded for the full 18 months compared to $3,6 million for the previous 12 months.

Malunga said the company has retrenched 45 employees in the six months to December 2013 and another 45 employees in the Proplastics division were also laid off. He added that there were further prospects for retrenchments going forward.

“The operating environment has proved difficult during the review period and is becoming increasingly more so,” he said.

“Consequently, the directors have taken steps to ensure that overheads and business activities are appropriately structured so as to weather the current operating environment and more important, to ensure that the group is well positioned to respond to an anticipated recovery in economic activity.”