BUSINESS REPORTER
Healthcare products provider, MedTech Holdings says it is pressing ahead with the plan to transform itself into a holding company with portfolios of investments.
Analysts said the proposed restructuring may improve MedTech’s capacity to operate sustainably.
Company secretary, Muhammad Patel, said discussions on the planned move, which may have far-reaching implications, are on-going.
“…..Discussions which involve a potential series of transactions at holding company level to transform MedTech into an investment holding company with the economic rights to separate investments or portfolios of investments belonging to the owners of different classes of shares are ongoing,” Patel said in a notice to shareholders.
MedTech specialises in the manufacturing and distribution of health, hygiene, beauty and pharmaceutical products.
MedTech operates MedTech Hospital Products (Private) Limited, MedTech Medical and Scientific (Private) Limited, Zvemvura Trading (Private) Limited, Vinpel Trading (Private) Limited and Zimbabwe Pharmaceuticals (Private) Limited.
The company’s consumer goods contribute 81.4% of the company’s net sales while hygiene products, cosmetic products, personal care products, manufacturing of hygiene, cosmetic and textile products contribute 16.3% of net sales and distribution of pharmaceuticals constitute 2.3%.
MedTech, however, is saddled with foreign currency debts amounting to R27.9m to foreign creditors.
In its trading update for the quarter to September 30, 2020, MedTech’s sales volumes increased by 5% compared to the comparative prior period. This was attributable to the FMCG segment.
The segment increased market share, by constantly supplying products at competitive prices resulting in increased shelf space in retail chain stores.
In the year to September 30, 2021, sales volumes, however, decreased by 18% as a result of a stance by management to restrict sales in the FMCG segment due to the continual devaluation of the debtors book with the aim of preserving shareholder value through hedging, decreased consumer spending as income levels have not kept up with rising general price levels and this has caused aggregate demand to remain subdued.
The company also experienced serious stockouts because of challenges in sourcing replacement stock of raw materials and goods in the manufacturing segment due to stop supply from foreign creditors because of overdue balances and key local suppliers demanding prepayment, and delays in restocking directly resulting from Covid-19 lock downs measures put in place by government to curb the spread of the virus.
Sales volumes in the manufacturing segment decreased 29% in the period under review compared to the comparative prior period. The year to September 30,2020, sales volumes were down by 8%
