daniel chigunwe
Enacy Mapakame
Leading diversified agricultural, mining and infrastructure equipment supplier, Zimplow Holdings Limited, says the El Niño-induced drought has affected its agriculture cluster subsequently weighing on overall group performance.
Agriculture is one of the group’s main businesses and has seen depressed demand due to the drought, which hit Zimbabwe and the rest of the Southern African region. As such, volumes for the cluster both locally and across the region fell during the five months to May 31, compared to the same period in the prior year.
According to the group, revenue for the five-month period registered a 20 percent decline compared to the same period last year. The decline is also attributed to a combination of factors, including power supply challenges, subdued foreign currency supply, global supply chain disruptions, and the El Niño-induced drought.
“The country is experiencing power supply challenges which are further lowering capacity utilisation levels within the various economic sectors.
The combination of the El-Nino induced drought, low international mineral prices (excluding gold and copper) and global supply chain challenges has affected the economy as a whole in the period under review,” said acting group chief executive officer Willem Swan.
The agricultural cluster, which includes Mealie Brand and Farmec, was particularly affected, with Mealie Brand experiencing a 57 percent decrease in local implement sales and a 75 percent decrease in export sales.
Farmec also saw a 21 percent decline in implement sales, while tractor volumes dropped by 55 percent due to liquidity constraints faced by farmers.
Despite the overall decline, the Valmec business unit within the agricultural cluster showed positive growth, with a 250 percent increase in tractor sales units and a significant increase in implement sales.
The logistics and automotive cluster, which includes Scanlink and Trentyre, had mixed results. Scanlink saw strong growth in truck and bus sales, with a 71 percent and 300 percent increase, respectively, compared to the prior year. However, Trentyre experienced a 38 percent decline in retread volumes for commercial tires due to raw material constraints, and new tire sales were down by 28 percent.
The mining and infrastructure cluster, which includes Tractive Power Solutions (TPS) and Powermec, also faced challenges. TPS saw a significant increase in service hours but flat parts volumes.
However, the business unit is optimistic about future sales due to the recent showcase of the Develon brand of mining and construction equipment and a growing order pipeline.
Powermec, on the other hand, saw a 25 percent decrease in generator sales and a 15 percent decline in parts and service hours revenue. The company is looking to expand its offerings by partnering with a solar equipment manufacturer.
CT Bolts, also within the mining and infrastructure cluster, experienced a 3 percent decline in revenue and a 9 percent decrease in sales tonnage. However, the business unit is encouraged by an increase in enquiries from the mining sector as gold prices remain high.
“The business unit is at the tail end of its certification process as it pertains to locally manufactured mining consumables such as roof bolts and shepherd hooks, together with the delivery of a nail manufacturing machine which is expected to be done during the third quarter of 2024,” said Swan.
Going forward, Zimplow’s management are taking a cautious approach due to the continued tight liquidity situation. The company is focusing on cash generation, cost containment, and balance sheet preservation.
However, there are positive signs in the mining sector, with stable gold prices and new mines coming online, which could present growth opportunities for the company’s mining and logistics sectors.
The company also plans to complete a capacity expansion project at Mealie Brand, develop synergies among its operating units, and continuously improve customer service standards.
Bongani Ndlovu