Unifreight slams brakes on foreign borrowings

BY TAFADZWA MHLANGA

TRANSPORT and Logistics concern, Unifreight Africa Limited’s chairman Peter Annesley says the company is going to limit foreign borrowings to minimise offshore liabilities in light of the exchange rate volatility.

Since the floating of the exchange rate on February 20, 2019, which saw the 1:1 rate between the US dollar against the RTGS dollar being scrapped off by the central bank, the local currency has continued to plunge.

As of yesterday the local currency was trading at US$1:$15,2 on the interbank market from the initial US$1:$2,5 when it was introduced.

Since the re-introduction of a local currency, which converted bank balances to Zimdollars, listed companies have been battling to clear legacy foreign debts and have since lodged them at the central bank.

During the half-year period ended June 2019, the company’s liabilities swelled to $86,5 million, an increase of 222% from $26,8 million in the same period the previous year.

“Our strategy is to protect shareholder value on the statement of financial position and bank gains we have made by continuously renewing our fleet and limit exposure to foreign borrowings; considering our legacy liabilities have been eroded by the exchange rate resulting in understated values,” Annesley said.

The company has since introduced measures to lock and maintain purchasing value in light of the inflationary environment.

Unifreight made an after-tax profit of 552% amounting to $3,4 million compared to $528 000 in the previous year.

The company’s cash and cash equivalents at the end of the half-year were down 88,4%, $208 000 compared to $1,8 million in the prior year.

Operating expenses amounted to $22,1 million, an increase of 95,5% compared to the previous record of $11,3 million. Revenue also increased by 123% from a record of $13,1 million to $29,2 million for the half-year ended June 30, 2019.

According to the company’s chairman, the less than truckload (LTL) — the transportation of relatively small freight — increased by 140% in the period ended June 30, 2019 due to the shift of more volume to the LTL, when the overall tonnage of the prior year was down 5,8%.

The group of companies says it is hopeful for a profitable year despite a 40% drop in volumes for the half-year ended June 30.

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