Zimplow feels the pinch 

CLOUDINE MATOLA

Zimplow Holdings Limited, the agro-industrial giant listed on the Victoria Falls Stock Exchange, is feeling the weight of Zimbabwe’s liquidity crisis and intensifying competition from informal businesses now integrating into the formal economy.

These pressures have led to reduced gross profit margins, the company revealed.

“From an economic perspective, factors such as tight liquidity, the integration of informal market participants into the formal economy, and intensified competition among formal businesses have led to reduced gross profit margins,” said Sharon Manangazira, the group’s company secretary.

Despite the margin squeeze, Zimplow remains hopeful of a turnaround in the coming months. Manangazira noted that increased liquidity is expected in Q2, supported by the seasonal delivery of tobacco and cereal crops and long-awaited payments to farmers.

“The Group expects liquidity to ease after deliveries of most of the tobacco and cereal crops in the second quarter, leading to increased opportunity for the Group’s agriculture-based business units. GMB has commenced payments to farmers for wheat deliveries from October 2024, which will contribute to increased liquidity amongst the Group’s primary target market,” she said.

Zimplow posted a 14% year-to-date (YTD) revenue growth to US$7.06m compared to the prior year, surpassing budget by 2%.

Yet, the company recorded a net loss before tax of US$513,000, highlighting the strain from suppressed margins and rising costs.

To navigate the turbulence, the group is rolling out targeted cost-efficiency measures, improving cash collection, and reducing excess inventory.

“Management is focusing on liquidating high-value and aging stock (tractors, implements, parts) across Farmec and Mealie Brand. Management is implementing stronger enforcement of payment terms, and administration and operating cost-saving initiatives successfully instituted at Farmec and Mealie Brand are being extended to other business units,” said Manangazira.

In the agricultural segment, Mealie Brand reported a disappointing Q1, with revenue 11% below budget and local sales down 27% year-to-date. The company blamed constrained market liquidity and a rise in grey imports for the downturn.

Farmec, however, delivered a solid performance, recording a 6% turnover above budget. Increased tractor sales, particularly the MF200 series, were key to this growth.

The logistics and automotive arm, particularly Scanlink, was a standout performer. It posted a 40% surge in YTD revenue compared to last year—also 40% above budget—thanks to increased demand for heavy-duty trucks and fleet services.

But not all business units had a smooth ride. Trentyre’s performance plummeted, with sales dropping 39% compared to the same period last year and falling 32% below budget projections. This underperformance reflects weaker market demand and growing competition in the tyre sector.

Tractive Power Solutions (TPS) posted a 174% revenue jump year-on-year, but the figure still came in 37% below budget, signaling execution challenges or market volatility.

CT Bolts recorded a 14% increase in volume sales compared to Q1 2024. However, profitability was dented by expensive filler stock from South Africa. Long lead times from Asian suppliers further compounded cost pressures.

In the energy and equipment space, Powermec’s Q1 revenue rose by 26%, finishing 1% ahead of budget. The company benefited from strong demand for solar installations and engine overhaul projects. However, generator set sales remained subdued due to stock limitations.

Operating costs were tightly controlled, staying within 4% of budget. Cost savings were realised through reduced overtime and more efficient technician deployment.

Zimplow’s roadmap for the rest of 2025 focuses on unlocking cash through inventory sales, improving receivables collection, and extending lean operational models across its business units.

With an anticipated easing of liquidity in Q2, driven by agricultural deliveries and state payments, the company is positioning itself to capitalise on increased spending in the rural economy.

Still, the macroeconomic headwinds—including a persistently illiquid market and rising pressure from both formal and informal competitors—mean that the path to sustained profitability will require strategic agility and rigorous execution.

As one of Zimbabwe’s leading agro-industrial players, Zimplow’s Q1 performance paints a clear picture of the wider challenges—and opportunities—facing the formal business sector in a transforming economy.