Zimplow pivots back to mining, infrastructure

Mining and earth moving equipment, Zimplow Holdings Limited has pivoted back to a fully-fledged mining and infrastructure equipment solutions company, securing new distributorship for renowned global brands.

The company has established a strong presence in the supply of filtration, lubricants, and mining ground ground-engaging tools (GET).

Recently, Zimplow successfully secured Service Level Agreements (SLA’s) with key operators with management upbeat about achieving profitability this current financial year supported by a strong order book and firm demand.

This also follows the establishment of a new division, Tractive Power Solutions (TSP), which has secured a new distributorship agreement with earth-moving equipment supplier Develon.

“This agreement will replace the previous Caterpillar Distributorship that was housed under Barzem,” said Zimplow.

The acquisition of Doosan by South Korean giant Hyundai led to the formation of HDI, from which the Develon Brand was born. HDI is a renowned global mining and construction equipment OEM (original equipment manufacturer) based in South Korea, with a long-standing equipment history dating back to 1970.

“The anticipated launch date for Develon is in the third quarter of 2024,” Zimplow indicated.

According to the group, TPS has also successfully negotiated an FAW distributorship, which will enhance the group’s capabilities in the mining and logistics industry. The FAW brand offers a well-priced, wide range of trucks and bus options suited to the tough African conditions for TPS clients.

Meanwhile, during the year to December 31, 2024, Zimplow’s revenue was US$32 million, representing a drop of 28 percent from prior year level as Barzem did not trade due to the termination of the CAT distributorship agreement in September 2022.

The late onset of summer rainfall in the 2023/24 cropping season dampened demand in the agricultural cluster and the impact of the economic headwinds resulted in a contraction in customer spending across the group.

As a result, a profit before tax of US$0,68 million was recorded, which was 74 percent below prior year.

Profit for the year went down to US$0,559 million from US$0,918 million recorded during the comparable year.

Total assets dropped to US$46,2 million from US$47,7 million recorded in the prior year.

Under the mining and infrastructure cluster, Powermec recorded generator unit sales in the period under review were 6 percent ahead of prior year underpinned by the erratic power supply experienced in the first quarter and third quarter.

However, service hours and parts revenue were subdued by 20 percent in comparison to the same period in the prior year due to reduced call-outs during the period when power was stable.

CT Bolts’ revenue was at the same level as prior year, whilst tonnage volume sales were depressed by 6 percent mainly due to the sales mix. Pressure on margins and operating costs weighed down the operating profit by 83 percent compared to prior year.

Under the agriculture cluster, Mealie Brand launched a two-wheel tractor and related implements during the period under review, which resulted in local sales revenue being at par with prior year. Implements sold in the local market were 23 percent ahead of prior year whilst exports were subdued by 24 percent.

The business unit’s revenue was 9 percent below the prior year owing to lower export sales volumes due to the proliferation of a cheaper product from Asia.

At Farmec, the tight liquidity crunch and the late rains during the 2023/24 cropping season significantly impacted the Business Unit’s performance, with tractor units and service hours sold being 37 percent below the comparable period.

Pressure on margins for the BU due to import cost-push as well as pricing reviews hurt profitability.

While the environment is expected to be challenging due El Nino induced drought and the corresponding downstream effect thereof and the impact of the soft mineral prices resulting in mines retreating or delaying expansion and capital expenditure spending, management is still upbeat of its FY24 performance.

“The group is insulating itself from the effects of these macro-economic factors. Management is confident that through executing its factory capacitation, the successful launch of the newly acquired OEM’s, the strategic business turnaround of the loss-making entities as well as embarking on a group-wide cost containment program, it will show commendable growth in revenue generation and profitability in 2024,” said the group.-herald