BUSINESS REPORTER
Agro-industrial concern, Zimplow Holdings Limited, has been rattled by a merciless weather phenomenon expected to sweep through Zimbabwe, Business Times can report.
The company, according to Zimplow Chairman Godfrey Manhambara, is worried about forecasts of an El Nino-induced drought in Zimbabwe because it could affect sales of agricultural equipment, which make up a significant portion of the company’s revenue.
In light of this, Manhambara stated that Zimplow will push other clusters to make up for the anticipated underperformance of agriculture sector due to the drought.
“Whilst the group is confident of growth driven by the mining, infrastructure and automotive clusters, the forecast of the El Niño rainfall pattern may reduce the group’s growth prospects as the agricultural cluster still constitutes a significant component of the group’s business,” Manhambara said.
He claimed that despite the dangers posed by El Nino, the company is starting over to reclaim its position as the go-to source for infrastructure, mining, and automotive equipment.
“The cluster has been focused on creating resilience owing to soft producer pricing and changes in weather patterns. “Therefore, the launch of Valmec, targeted at supporting the entry level or emerging commercial farmer either with Valtra tractors or competitive brands with Sparex parts, is set to cover the needs of the entry-level market segment which had not been covered by Zimplow in the past, at the same time allowing Farmec and Mealie Brand to dedicate their focus on their established market segments without diluting their current effort.
Mealie Brand local implements sales contributed 88% of total revenue in the period under review. Implements sold in the local market were 69% ahead of prior year whilst exports were depressed by 56% below prior year mainly due to the slow uptake,” Manhambara said.
He said that as a result of low trading margins and the company’s efforts to protect its market position from competitors, operating profit in real terms was down 4% from the previous year.
Profit after tax fell to ZWL$1.05bn in the six months to June 30, 2023 from ZWL$22.74bn reported in the prior comparative period.
“The trading environment continued to be challenging in the first half of the year, caused by a depressed liquidity environment.
“Furthermore, reduced spending on road construction projects affected the general level of activity in the infrastructure sector. This impacted adversely on the business activity,” he said.
Whole goods volumes were 28% lower than the prior year, according to Manhambara, who claimed that the division’s revenue drivers were negatively impacted by the tight liquidity environment and soft producer pricing.
However, Zimplow’ s initiatives to improve aftersales customer experience resulted in a 10% increase in service revenue in real terms over the prior year.
He further stated that the business unit’s main goal up until the end of the year is to make up lost ground on sales of tractors and implements.
