AGRICULTURAL equipment maker, Zimplow Holdings Limited says it is at an advanced stage in concluding the acquisition of a 49% stake in Barzem, in line with the provisions of the shareholders agreement.
This move is set to drive the performance of the group’s new business, Tractive Power Solutions (TPS), an entity set up in order to provide earthmoving and heavy equipment solutions to its clientele.
In its trading update for the quarter ended March 31, 2023, Zimplow said the launch of TPS in an already contested market was well received by customers who the group has served through Barzem.
“Although the group is yet to secure exclusive distribution via an internationally acclaimed original equipment manufacturer (OEM), the expertise and technical competence in running an earthmoving dealership has provided TPS and Zimplow the much-needed depth in providing a one-stop shop for earthmoving equipment fleet owners,” the group said.
To date, the group has secured service level agreement, repair and maintenance contracts among various onsite solutions with major fleet operators in the country.
While the transition from CAT distributorship has not been easy, Zimplow expects to have repositioned itself well in the earthmoving equipment sector by year end.
During an analyst briefing recently, Zimplow chief executive officer Vimbayi Nyakudya hinted that having 100% access to Barzem infrastructure meant the group could now position itself or pivot that portfolio to be able to take advantage of it for its other businesses.
“We have used that property solely for caterpillar business. We can now utilise that infrastructure for other businesses, which are within the group. Having infrastructure like that means you can position yourself in the recruitment and selection of the right OEM,” Nyakudya said.
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The group is acquiring the Barloworld stake in Barzem at a 20 percent discount.
Negotiations are underway on the price. Closing that transaction is also expected to give the group the much-needed lift to conclude the acquisition of an OEM.
Turning to the other units, CT Bolts' tonnage was ahead of budget, compared to the same period in the prior year.
“The company will continue to undertake robust penetration strategies with respect to new market segments in order to boost profitability thereof. For Powermec, parts sales and service increased by 27% and 9% respectively in comparison to the same period in the prior year. The business unit’s generator sales and solar installations, however, slightly declined by 4% during the period under review compared to prior year performance,” Zimplow said.
Mealie Brand saw sales volumes of local implements improve by 72% in comparison to the prior year same period.
Preparations for the tobacco season boosted local sales as distributors were preparing for the tobacco season.
The sales volumes for the export market fell by 48% in comparison to the same period in 2022.
“Management will continue to take measures to consolidate the volume of local sales and improve the revenue on exports. The capacitation programme continues among other improved efficiency and product diversification opportunities the group is pursuing. The immediate focus, however, remains to eliminate bottlenecks in the production process as we prepare for the projected growth given the La Nina season in Q2 [second quarter] and Q3 [third quarter],” Zimplow said.
Efforts to create resilience in Farmec’s business model yielded positive results during the period.
Zimplow sales service hours increased by 16% compared to the same period in the year 2022 and implements sales grew by 20% against prior year for the period under review.
Given the delayed receipt of wheat proceeds, tractor volumes declined by 23% for the period under review.
“Farmec is currently implementing aggressive marketing efforts in order to push the stock on the ground which in turn will boost revenue levels thereof. The new business unit (Valmec) is starting to receive new stock and establishing its own identity on the market. Management expects better resource allocation and efficiency in market penetration as the year progresses,” Zimplow said.