ZIMPLOW has widened its loss to $2 million for the half-year ended June 30 2016 from $1,8m in the same period last year due to a slump in turnover.
BY TARISAI MANDIZHA
In the period under review, turnover declined by 30% to $8,3m from $11,9m in 2015.
In a statement accompanying the group’s unaudited results, Zimplow chairperson Thomas Chataika said the group’s revenue was 70% in the same period last year as a result of the declining volumes.
He said net operating costs were down by 37% from last year due to the cost containment measures implemented by the group, in particular the staff rationalisation programme of 2015.
Net finance cost also reduced by 40% on prior year due to efforts made by the group to reduce borrowings.
“The operating environment continued to be difficult in the first half of 2016. The impact of El Nino and the general economic environment resulted in a fairly depressed first quarter,” he said.
“However, turnover improved in the second quarter for a number of reasons. Competitive pricing, improved service delivery and tobacco sales positively impacted on the topline of the agriculture business units. Cost control and efforts to improve efficiencies based on a leaner staff structure began to bear fruit.”
He said Zimplow would continue countering the depressed trading environment with a focus on international re-organisation coupled with cost control, cash management and the reduction of borrowing.
Commenting on individual brands, he said margins for Mealie Brand were, however, under pressure as the average unit price dropped by 15%.
Volumes of ploughs sold on the local market increased by 20% and total implement volumes increased by 15% compared to the previous year.
“Mealie Brand is looking at increased sales in the second half as the business reclaims lost market share in the domestic market and the regional export market. The units are experiencing strong demand in Zambia and we look forward to brighter prospects as we enter the East and Central Africa,” he said.
Chataika said Farmec was not spared from the effect of the drought conditions of the 2015/2016 rainy season, such that the tractor volumes declined by 37% compared to the same period last year.
“Farmec is well placed for a stronger second half of the year as demand improves from the commencement of land preparation for the new season. The standards in the workshops are continuously improving and as a result increased levels of service business are anticipated,” Chataika said.
Powermec volumes for generators went down by 52% compared to the same period last year and volumes for earth moving equipment at Barzem were half of that realised in the same period last year while power units were 28% of last year.
He said CT Bolts volumes uptake from all key sectors was below projections and even prior year. However, the business showed resilience with turnover only being down 15% compared to the same period last year.