Itai Ndongwe
HARARE – Zimplow Holdings Limited, a leading manufacturer and distributor of agricultural equipment and services, has reported a significant decline in revenue for the five-month period ended May 31, 2024. The company’s revenue decreased by 20% to US$10.9 million, compared to the same period last year.
According to the company’s trading update, the decline in revenue is attributed to the devastating effects of the El-Nino induced drought, which has severely impacted the agricultural sector in the region while the mineral commodity prices are subdued especially PGM.
Addressing the shareholders this morning, acting CEO Willem Swan noted that, “the group recorded revenue amounting to US$10.9 million, which is a 20% reduction from the comparative period last year. The decline is mainly attributed to the attributable to the adverse impacts mentioned above.”
The Agricultural cluster experienced a significant decline in sales volumes for Mealie Brand implements. Domestic sales plummeted by 57% compared to the same period last year, while export sales suffered an even greater decline of 75% compared to the same period in 2023. “The business unit has been adversely affected by the El Nino induced drought resulting in significant reduction in sales volumes,” Swan added.
Farmec experienced a 21% decline in implement sales and a 55% drop in tractor sales due to liquidity constraints among farmers, despite this, Farmec remains the leading tractor distributor in Zimbabwe. On the other hand, Valmec saw significant growth, with a 250% increase in tractor sales and a substantial increase in implement sales.
Meanwhile, in the logistics and automotive cluster, Scanlink solidified its position in the Tier 1 segment, with truck and bus sales surpassing last year’s figures by 71% and 300%, respectively. Additionally, service hours and parts sales saw significant increases of 13% and 92%, respectively.
Trentyre experienced a significant decline in commercial tyre sales, with re-tread volumes dropping by 38% due to raw material shortages, and new tyre sales falling by 28% compared to the same period last year. “Management is currently focused on the implementation of a cocktail of initiatives, including but not limited to the consolidation of branches, a staff rationalisation exercise and investment in working capital with the aim of returning the business unit to profitability.
Management is confident of returning the business unit to profitability through the above-mentioned initiatives coupled with refinement in the supply chain framework and the introduction of a Tier 2 tyre offering in July 2024,” he added.
In the mining and infrastructure cluster, Tractive Power Solutions (TPS) saw a significant increase in service hours compared to the same period last year, while parts volumes remained steady. Additionally, TPS received the first shipment of Develon brand units, which were showcased at the recent ADMA show, marking a new development for the business unit. “Management anticipates that this will translate into sales in the second half of the year. The business unit expects to take delivery of further units in July 2024 together with FAW trucks and is confident that it will meet its projections to year-end on the back of a growing order pipeline.”
Powermec experienced a decline in sales, with generators down by 25% and parts and service hours revenue decreasing by 15% compared to the same period last year, due to the challenging economic conditions and limited liquidity in the market. However, the company has increased its investment in stockholding and product support initiatives to ensure it can adequately meet customer needs amid the frequent power outages this winter.
CT Bolts’ revenue recorded a 3% decline in comparison to the same period last year whilst sales tonnage recorded a 9% negative variance. “The decrease in volumes emanated from reduced orders from various mining houses due to a reduction in global mineral prices. The business unit is at the tail end of its certification process as it pertains to locally manufactured mining consumables such as roof bolts and shepherd hooks, together with the delivery of nail manufacturing machine which is expected to be done during the third quarter of 2024.”
Looking ahead to the second half of the year, the group’s priorities include maximizing cash generation, controlling costs, preserving the balance sheet, and completing the capacitation project at Mealie Brand. Additionally, the group aims to enhance synergies between operating units and continuously improve customer service standards.
