Nelson Gahadza Senior Business Reporter
Zimplow Holdings says its diversified structure puts it in a strong position to offset economic pressures stemming from the challenging trading environment.
The group manufactures and markets a diverse range of products for the construction, infrastructure and agriculture sectors in Zimbabwe.
It also manufactures and sells metal fasteners for the mining, construction and agricultural sectors and is involved in real estate management and leasing.
The company announced in a trade update for the first quarter ended March 31, 2022 that it had suffered from foreign exchange shortages culminating in exchange rate volatility and inflationary pressures.
On the agricultural side, the drop in producer prices along with less than expected rainfall for the 2021/22 season impacted yields, resulting in lower disposal proceeds for the farmer.
Sharon Manangazira, the group’s secretary, said that despite the challenges in the domestic operating environment, Zimplow saw real revenue and profitability growth of 5 percent and 48 percent, respectively.
“The Board is encouraged by the robust performance as management continues to capitalize on opportunities in the market given the Group’s diversified structure,” she said.
She added that given its diversified structure, the group is in a strong position to build on the robust performance of the first quarter despite the difficult trading environment.
“Furthermore, actions taken by the Board, including realigning the governance structure with the group strategy and leveraging group synergies, have positioned the group to be a one-stop shop for its client base,” said Mrs. Manangazira.
Additionally, she noted that the new positioning in the earthmoving market should unlock the group’s ability, infrastructure and expertise to generate sustainable returns.
In terms of the performance of each subsidiary, Farmec, which is assigned to the agricultural cluster, saw significant volume growth across all product lines, with tractor and implement volumes increasing 53 percent and 13 percent, respectively.
Parts sales and service capacity utilization increased seven percent and 51 percent, respectively, from the prior year and same period.
“Given the strong demand in the first quarter of 2022, Farmec is expected to continue driving the group performance,” said Ms. Manangazira.
The Mealie brand saw 26 percent year-on-year growth in attachment exports, although volumes for local attachments fell 15 percent compared to the same period last year.
Ms Manangazira said the erratic rainy season and hyperinflationary environment had dampened the uptake of animal-drawn equipment locally, leaving farmers to rely on their existing equipment for maintenance, resulting in a 41 percent year-on-year increase in spare parts sold have led.
“We expect export market volumes to continue to develop positively given better rainfall patterns in the region outside Zimbabwe and the easing of Covid-19 restrictions.
“Going forward, management will continue to focus on improved factory efficiencies to improve global raw material cost push factors,” she said.
Under the mining and infrastructure cluster, Barzem’s quarterly performance was constrained by foreign exchange constraints, causing earthmoving equipment volumes to fall 88 percent from last year’s first-quarter performance.
Ms. Manangazira said management has focused on maintaining value and providing customized services to meet our customers’ fleet maintenance needs.
“To that end, workshop efficiency was 53 percent higher than last year for the same reporting period.”
She noted that CT Bolts continues to grow with a 25 percent increase in tonnage of fasteners sold compared to the same period last year.
“Focusing on our core business, which is supplying high quality, reliable fasteners to the sectors we serve, has driven CT Bolts’ performance to date,” she said.
At Powermec, generator sets and solar volumes were up 44 percent year-on-year, while capacity utilization increased 71 percent.
Ms Manangazira said sales have improved by 230 percent compared to the same period last year and the performance of the solar product range continues to gain traction.
“The group looks forward to a strong performance based on increased demand for alternative power products in light of the power outages experienced so far in 2022,” she said.
In the logistics and automotive cluster, Scanlink achieved real sales growth of 64 percent compared to the first quarter of the previous year thanks to a strong after-sales performance.
Ms Manangazira said availability of the main supplier’s trucks and buses has improved and volumes sold during the period were at the same level as last year.
“Spare parts sales increased by 57 percent and service hours grew by six percent. It is important to note that with an improved range of trucks and buses, the business unit is confident that sales volume will increase into the third quarter of 2022,” she said.
The Group’s Trentyre performance for the quarter was driven by significant supply chain realignments which are expected to provide the business unit with strong growth prospects for the remainder of the year.
During the period, the division saw 21 percent growth in off-road tires, while year-over-year performance in commercial vehicle and consumer tires resulted in an average sales decline of 14 percent in the first quarter of 2022 compared to the same period last year.