adminGolden Sibanda Senior Business Reporter
ZIMBABWE Stock Exchange-listed PG Industries is working on strategic plans to improve operational performance and reduce heavy interest burden and strengthen the balance sheet in the wake of persistent perennial losses.
The planned initiatives come on the back of an 11 percent increase in revenue to US$16,9 million achieved against softening demand and tightening liquidity conditions in the 2013 interim period.
But the growth in revenue could not take the building materials supplier out of loss making territory, which, however, declined from US$2 million in the 2012 interim to US$842 000 this year.
With subdued business activity projected to continue until year end the group has come up with innovative ways to get supplies and this has improved access to products for distribution.
However, looking ahead, PG Industries said it will review group structures to reduce overheads and re-look at its business models, especially merchandising, to improve its profitability.
The board will also restructure the balance sheet to address negative equity position and also dispose of properties excess to requirements to generate income to reduce bank borrowings.
Company secretary Ms Kudakwashe Waniwa said some of the initiatives had already been approved while others still required owners’ approval, which the building material supplier will seek out.
“The group has approved a number of strategic actions to improve the operational performance, reduce heavy interest burden and strengthen balance sheet,” Ms Waniwa said.
PG Industries continued to suffer losses while its current liabilities exceed current assets by US$8,9 million amid continued working capital constraints, which puts its going concern status in great danger.
“The conditions give a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore may not be able to realise its assets and discharge its liabilities in the ordinary course of the business,” PG said in an interim accounts statement.
In terms of operations, PG Industries said merchandising sales grew by a modest 4 percent to US$10,9 million. The liquidity conditions in the economy and competitive pressure that prevailed in the economy negatively impacted on the performance of the division, the firm said.
Sales at Zimtile grew by 9 percent, driven mainly by strong demand for concrete roofing tiles, bricks and pavers.
Following the commissioning of a new tile making plant, capacity has improved. PG Glass recorded a 22 percent increase in sales to US$1,5 million on better stocking. PG Industries disposed of 18,9 percent of its 27,9 percent interest in Manica Boards and Doors Limited and liquidated an equivalent portion of its loan investment in Manica Boards and Doors.
The remaining 9 percent shareholding in MBD is now being treated as an investment.
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