Zimplow expansion to offset end of Caterpillar dealership
Zimplow Holdings Limited, a manufacturer of construction, infrastructure and agriculture products, says it is spearheading a capacity expansion initiative across its operating units, to offset the impact of business following the end of the CAT dealership for its unit, Barzem.
Among the key initiatives are the launch of new business units, Valmec and Tractive Power Solutions (TPS), as well as increased resource allocation to Scanlink and Trentyre units to boost performance and overall contribution to the group.
Barzem’s business was established over 70 years ago as the local Caterpillar (CAT) dealer. However, early last year, Zimplow announced Barzem would exit the CAT distributorship on September 30, 2022 on the back of the changes in the strategic direction by both the supplier and the group.
The group indicated that whilst this exit would have a negative impact on the overall revenue performance of the subsidiary, management believed that the risk management protocols that were put in place ensured that the group preserved value and shareholder returns.
In an interview on the sidelines of the group’s analyst briefing, group chief executive officer Vimbayi Nyakudya indicated management was also fasttracking some of the projects that had been in the pipeline as part of the initiatives to increase production and offset the impact of the exit.
As a result of the end of the dealership, Barzem recorded a 67 percent drop in business, which weighed on the group’s overall performance for the year ending December 31, 2022.
“That 67 percent drop in business was offset by measures we took from a revenue generation perspective. We had to introduce new businesses,” said Mr Nyakudya.
“We introduced a new business TPS to take care of the earth-moving equipment business needs of our customers and another business called Valmec to look after the Valtra brand of tractors and other tier 2 implements that are tractor-drawn.”
As part of the initiatives to enhance capacity and production output, Zimplow had to fast-track projects to upgrade production equipment at Mealie Brand. This, Mr Nyakudya said, should see a wide product range from the group allowing it to meet the demand for both local and export markets.
For the full year to December 31, 2022, total revenue rose 6 percent to $24 billion despite the adverse impact of Barzem on the business.
Zimplow’s management is upbeat the group will soon record earnings uptick as the expansion initiatives begin to bear fruit this current financial year and going forward.
“Overall if you look at our top-line performance, we had a 6 percent growth so the initiatives we put through to ameliorate the impact of Barzem worked although the impact of provisions left us in a loss position “But since these are once-off provisions, we should be able to see Zimplow back to the performance we are accustomed to,” he said.-herald.cl.zw
