Zimplow ponders post CAT exit strategy for Barzem

AGRO-INDUSTRIAL firm, Zimplow Holdings, says following the exit of its Barzem unit from the Caterpillar (CAT) distributorship, it will soon introduce a new corporate brand to service the market’s earth moving equipment needs.

The distributorship arrangement was established over 70 years ago and Barzen exited on October 1, 2022.

According to Zimplow’s condensed group results for the six months ended June 30, 2022, the period under review has been challenging for Barzem.

“Firstly, the business unit experienced delays in the remittance of foreign payments via the auction system causing parts and equipment orders to be delayed or cancelled,” said the company.

“The second quarter then began with a notice of termination of the CAT distributorship, which is coming into effect on 1st October 2022.

“The business unit has, therefore, been seized with value preservation actions in preparation for Zimplow to transition to a new supplier of earth moving equipment albeit under a new corporate identity.”

However, the firm said it remains positive in its strategy execution to deliver a stronger Zimplow as the year 2022 closes.

“In addition, the group is pushing ahead on its commitment to the mining and infrastructure equipment sector and will soon introduce a new corporate brand to service the market’s earth moving equipment needs in line with our customer’s expectations,” it said.

Under its strategic business units, Zimplow owns Barzem, CT Bolts, Powermec, Farmec and Mealie Brand.

On sector performance, the Farmec unit had a strong volume performance with tractors at 22 percent ahead of prior year, and tractor drawn implements three percent up on the prior period.

The dry-spell that persisted in the second half of the 2021/22 season had an impact on the demand for mealie brand products due to reduced yields by users of these products who are ordinarily dry land farmers.

It said animal drawn implements volumes declined by 26 percent against the comparative period.

“The spares volumes for the local market were, however, pleasing with a 35 percent growth against the same period last year as farmers sought to apply the reduced disposal incomes on equipment maintenance rather than replacement.

“The drive to expand the business unit’s capacity and product range remains on course as evidenced by the launch of the 2-Wheel Tractor range of products,” said the company.

CT Bolts sold 12 percent more tonnage compared to the 2021 same period under review and the focus now remains on establishing relationships based on quality and strength of our product and services, the firm said.

On financial performance, the group recorded growth in revenue of 24 percent compared to prior year driven by positive operational performance and volume growth in key segments of the Group.

“Profitability was 64 percent ahead of prior year supported by a 12 fold increase in exchange and fair value gains. The group remains focused on realigning the working capital position given the need to rely on internal resources arising from increased lead times, delayed remittance of auction funds and reduced demand following the liquidity squeeze driven by monetary policy measures,” it said.

“The group is geared on strengthening its balance sheet position by reducing foreign liabilities, and repositioning the group to deliver earth moving equipment through a new Original Equipment Manufacturer (OEM) or supplier.”-chronicle.co.zw