HomeBusinessZimplow records 76% after tax profit

Zimplow records 76% after tax profit

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BY MISHMA CHAKANYUKA

Zimplow reported an after tax profit increase of 76% to US$6 million in the year ended December 31, 2018 from US$3,4 million recorded in the previous year, driven by growth in revenue and a marked decline in costs.

The group’s revenue was up 25% on the prior year figure of US$39,1 million to US$48,7 million in 2018.

In a statement accompanying the company’s financial results, chairman Thomas Chataika said the company had benefited from the performance of the country’s agricultural sector.

Cost containment measures had resulted in the net profit percentage going up from 9% to 12%, he said.

The group’s average cost of borrowings for the period was 8%, as the group acquired a term loan facility of US$2 million, secured against a notarial covering bond which included the company’s inventory and another US$2 million secured against a building.

Zimplow operates five business units, namely Barzem, Mealie Brand, Powermec, CT Bolts and Farmec, which all performed well during the period under review.

Chataika said Mealie Brand generated sufficient export sales to sustain itself and fund other divisions of the group.

“Revenues went up 9% from US$11,5 million to US$12,5 million, with the mix tilted towards more profitable local sales. Underlying volumes of local implements were up 19% to 43 490, with exports down 48% to 23 610. Due to effective cost management, net profits went up 41% from US$2,9 million to US$4,1 million,” he said.

Farmec revenues increased by 59% from US$11,1 million to US$17,7 million due to strong showing in tractor sales, which grew up by 75% from 95 units in 2017 to 116 units in 2018.

Farmec’s net profit was up 145% to US$2,7 million from US$1,1 million in the comparative year.

Revenue for Powermec was up 116% from US$1,9 million in 2017 to US$4,1 million in 2018 and profit increased by 18% from the prior year to US$350 000.

The Barzem unit reported revenue increases of 7% to US$12,7 million.

“Revenues at Barzem were up 7% to US$12,7 million. Alignment of shareholder objectives and interests is the first step towards putting Barzem in a position to competently serve the local market. We are working at this,” he said.

CT Bolts’ turnover was up 20% form US$1,5 million to US$1,8 million, with profitability up 96% to US$724 000.

The group expects an improved performance on the mining side and will take advantage of opportunities as they present themselves in 2019.

“On the mining side, we expect an improved performance from Barzem for the coming financial year on the back of parts and services. We will take advantage of opportunities as they present themselves in the 2019 financial year,” Chataika said.

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