CLOUDINE MATOLA
Anxiety has gripped Masimba Holdings Limited, a publicly traded construction and industrial company, as it may struggle to execute its orderbook largely due the unfavourable effects of El Nino phenomena and the dropping prices of minerals on the global market, Business Times can report.
This is despite experiencing an upswing, rising by 138% to US$248m from US$104m reported in the previous year.
This was confirmed by the board chairman,Gregory Sebborn, who said the government is likely to be forced to prioritise food relief over infrastructure development.
Construction companies in Zimbabwe are taking on government projects. This has been good business for local contractors.
But, delays in payments were eating into into the contractors contacts, threatening the viability of the construction companies.
“The group has a firm order book valued at US$248m compared to US$104m in 2022 with tenures of between three months to three years. However, the execution of this order book may be negatively impacted by the effects of the El Nino weather phenomenon and the declining
mineral prices,” Sebborn said.
These problems. Sebborn fears government could be forced to prioritise food relief over infrastructure development, which would have a detrimental impact on the capital expenditure in the private sector.
“These factors could lead to the government prioritising food relief over infrastructure development and may result in capital expenditure budget cuts in the private sector,” Sebborn said.
In its financial results for the year to December 31, 2024, Masimba reported a 39% profit decline to US$7.5m from US$12m reported in 2022.
The increase was attributed to sub-optimal currency payment mix on most of the projects that were not in line with the increased dollarisation of the economy.
Revenue for the group in the period under review grew by 8% to US$53.8m from US$49.8m reported in the previous year.
The group said revenue growth volumes was attributable to a strong and firm order book at the beginning of the year.
Total assets for the group stood at US$85.8m in the period under review from US$63.3m reported in 2022. The increase was attributed to the growth in contracts in progress and contracts receivables.
The company said:”The growth in contracts in progress and contracts receivables was attributable to growth in revenues coupled with the impact of delayed payments from clients on the back of liquidity constraints. The decline of the current ratio to 1.01 from 1.31 in 2022 was attributable to a strategic decision to purchase property, plant and equipment with short term facilities in order to capacitate the execution of long-term projects. Based on the forecast cash flows, this position should improve in the second half of the 2024 financial year.”
The group said cash generated from operating activities increased to US$5m f in the period under review from US$0.8m reported in 2022.
