Zimplow records strong order book, as revenue spike 33pc

Zimplow saw its top and bottom line performance for the first five months of 2022 from continuing operations rise 33 percent and 58 percent respectively, in real terms, despite the challenging operating environment.

Group chief executive officer, Vimbayi Nyakudya, told shareholders at the firm’s annual general meeting that they recognise the efforts by the government to bring economic stability as well as to stimulate growth in the key sectors of the economy.

Nyakudya said the trading environment was characterised by foreign currency shortages, exchange rate volatility, inflationary pressures, and worsening power cuts. Also, the geopolitical conflict in Eastern Europe, which has also caused supply chain distortions and steep raw material cost increases.

“Management is leveraging on a realigned group structure to deliver growth initiatives in line with strategy and a change in the operating environment,” he said.

Of the group divisions, Farmec recorded a 24 percent growth in revenue during the period under review. Volumes of tractors and implements, a key indicator of demand, grew by 41 percent and 10 percent against the prior year, respectively. Service capacity and utilisation rose 65 percent when compared to the same period last year.

Farmec is poised to continue the growth trajectory given demand management plans in place. He said the drought and the general trading environment have negatively impacted the dry land subsistence farmers.

“Demand for animal drawn implements stairs, however, increased by 39 percent and 59 percent in the local and export markets respectively as farmers rely on replacement of the fast wearing spares of their implements.”

Mealie Brand is gearing towards increasing foreign currency generation, he said, through exports and product development.

As for the logistics and automotive clusters, Scanlink increased revenue by 64 percent during the period under review. The business unit profitability surged 70 percent compared to the same period of the prior year. This was attributed to a 50 percent growth in the sales of trucks and buses.

Part sales improved by 36 percent and service revenue grew by 90 percent compared to the same period last year.

“Improved supply of buses and trucks is expected to significantly drive the business unit revenue and profitability for the financial year 2022,” he said.

He said growth in volumes of off-road tyres continued to drive overall tyre volumes as they were up 15 percent against the prior year.

“Improvement in the supply of raw materials as well as the reduction of procuring time at the retreading factory after the installation of the… fitness has seen the volume of retreading grow by 62 percent against the prior year.” As a result, Trentyre had a commendable financial performance during the period under review as it swung from a loss-making position to profitability.

On the mining and infrastructure cluster, he said demand for alternative power sources such as solar equipment and generators has increased significantly owing to load shedding. Generator sales rose 189 percent with a sales mix skewed towards big generators. Perkins and electoral part sales and service also increased by 73 percent and 80 percent respectively. Profitability was 307 percent ahead of the prior year.

“Given the prevailing power outages, Powermec expects to be operating at full capacity in order to meet the alternative power demand,” he said.

Volumes at CT Bolts were up 16 percent resulting in a 23 percent growth in revenue in comparison to the same period last year. Accordingly, the business unit recorded a 41 percent increase in profitability compared to the same period in the prior year.

“The company continues to penetrate new market segments as it seeks to deliver customer service solutions.”

Turning to discontinued operations, he said the focus is on Barzem to deliver outstanding orders of equipment as well as to provide after sales support in line with CAT distributorship which is germinating on 30th September 2022.

Management has also focused on the need to preserve the Barzem balance sheet to allow for a transition into the future.

“The group is actively pursuing a new supplier for an original equipment manufacturer for earthmoving equipment,” he said.

“In this respect, the group will launch a new business unit to carry out the sales and provision of after sales services of earthmoving equipment towards the end of the third quarter of 2022.”

In his outlook, Nyakudya said the trading environment is expected to remain volatile given the uncertainties in the trading environment globally. However, he said the group is geared to take advantage of opportunities in its diversified market approach to ameliorate the loss of business at Barzem.

“The order book for the second half is strong, supported by the pipeline in the logistics and automotive clusters,” he said.

The initiatives put in place to grow revenue in line with the group’s strategies are bearing fruit, and management is committed to providing customer service through the reliable premier brands of equipment and after sales service function, he added.

At the AGM directors fees and auditors remuneration were approved at $82,56 million and $17,82 million respectively. Ernst & Young Chartered Accountants (EY) which has served the company for the past 9 years was re-appointed in their last year’s as external auditors-ebusinessweekly