RYAN CHIGOCHE
Powermec, a unit of listed diversified manufacturer Zimplow Holdings, is anticipating a robust performance throughout the year amid indications that power cuts could persist in the country.
This comes after the unit recorded a 230% revenue growth in the quarter ended March 31 2022 as volumes in gen-sets and solar equipment were 44% ahead of prior year while capacity utilisation increased by 71%.
In a trading update for the quarter ended March, Zimplow company secretary Sharon Manangazira said the company is set to sell more solar products with the expectation that the power cuts will persist.
“The national grid experienced increased power cuts boosting demand for the company’s products and services…The performance of the solar range of products continues to gather traction and the group looks forward to a strong performance premised on increased demand for alternative power products given the power outages experienced so far in 2022,” Manangazira said.
As the nation struggles with weak indigenous power generation, Zesa Holdings recently said that US$2.5bn is needed to reduce load shedding.
Currently, the power utility is struggling to obtain the US$17m per month it needs from the Reserve Bank of Zimbabwe to import energy.
There is now a power shortfall of around 1,600 MW, which is driving the need to import electricity due to growing demand and inadequate power output from both hydro and thermal energy sources.
Another major challenge for the power utility is its inability to charge a cost effective tariff where Zesa requires foreign currency for its operations but charging its tariff in local currency.
In its trading update for the quarter, Zimplow recorded a 5% and 48% growth in revenue and profitability in real terms respectively, despite the challenges obtaining in the domestic operating environment among them foreign currency shortages , exchange rate volatility and inflationary pressures during the first quarter of 2022.
In the group’s agriculture cluster the company realised growth in the quarter despite the softening of producer prices, together with the lower-than-expected rainfall for the 2021/22 season affected yields which gave rise to reduced disposal income by the farmer.
Farmec recorded a significant growth in volumes across all product lines as tractors and implements volumes increased by 53% and 13% respectively while the Parts sales and service capacity utilisation increased by 7% and 51% respectively against prior year and same period under review.
Despite local implement volumes going down by 15% compared to the same period last year, Mealie Brand is off to a good start because to the development in export implement volumes, which were up 26% from the prior year.
In the mining and infrastructure cluster CT Bolts unit recorded a 25% increase in
tonnage of fasteners sold compared to the same period in the prior year as the continued on its thrust on the core business, which is delivering quality and reliable fasteners.
Significant growth was also realised in the logistics and automotive structure as Scanlink managed a revenue growth of 64% in real terms compared to the first quarter in the prior year driven by a strong after-sales performance.
For Scanlink the company said the business unit is confident of increased sales volumes going into the third quarter of 2022 driven given there is improved supply of truck and buses.
However, for Trentyre, there was a 14% drop in revenue in Q1 2022 in comparison to prior year same period as the unit was affected by significant supply chain disruptions.
On the outlook the company secretary said the group is positive of stronger performances driven by their diversity.
‘’The group is in a strong position given its diversified structure to build on
the resilient Q1 performance despite the challenging trading environment,’’ Manangazira said.
“…In addition, the new positioning in the earth moving market is expected to unlock the group’s capability, infrastructure and expertise to deliver sustainable returns and fulfil value preservation objectives for all our stakeholders,’’ she added.
