Zimplow profit up

months to June 30.
The agricultural implements supplier’s total revenue amounted to US$5 million with the domestic market and exports contributing 83 percent and 17 percent respectively.
Earnings before interest, taxes and amortisation (EBITDA) grew ahead of revenue, with an 83 percent growth to US$677 095 indicating EBITDA margin of 13,6 percent up from 10,6 percent.
The profit before tax for the period stood at US$818 985 up from US$423 449 in the prior comparable period.Despite increasing competition both locally and regionally, management said they are confident that they will exceed their initial budget of a 10 percent growth in earnings.
The first six months is traditionally the slow growth period contributing about a third of the group’s business. In terms of the group’s divisions, Mealie Brand maintained its flagship position, with total implements sales going up 27 percent when compared to the first six months of last year.
An 81 percent increase in domestic implement volumes over the prior year was recorded, supported by better than expected cotton prices to farmers and an increased tobacco crop.
Exports declined by 35 percent due to timing differences and a drought in East Africa that saw the group not recording any sales to the region and also competition from India and China. Spares sales and production also declined due to a decline in exports.
CT Bolts gained market share on its mild steel products due to a six percent deliberate price reduction strategy to muscle out smaller competitors.
Tassburg operated at low capacity due to delays in steel deliveries; however the unit managed to record a 38 percent increase in sales volumes to 51 tonnes.
Both CT Bolts and Tassburg operated profitably during the period.In a recent research paper, Imara Edwards Securities predicted a positive outlook in the long run for the company, especially in view of the imminent revival of the Zimbabwe Iron and Steel Company.
“The comeback of Ziscosteel will significantly benefit Zimplow as the proximity will cut transportation costs and enable them to better negotiate on pricing and quality.
“Export demand is expected to improve, especially from Angola and Zambia, where the company’s products are in high demand,” said the report.

The research firm, however, said although the duty on mild steel products was removed in the recent mid-term fiscal policy review, the effect will be marginal on Zimplow as most of their inputs were already duty free.