daniel chigunwe
Business Writer
Zimplow Holdings Limited recorded US$20 6 million in revenue for the third quarter of 2024, representing a 12 percent decline compared to the same period last year, according to the group’s trading update.
Despite the decline, Zimplow anticipates a stronger finish to the year, supported by ongoing strategic initiatives and improved market conditions.
“While this performance is below prior year, we are encouraged by the positive trend towards profitability observed in most business units since the start of the third quarter,” stated Sharon Manangazira, the Group Company Secretary.
“This comes against a backdrop of a US$1,4 million loss before tax as at 30 June 2024.”
The agricultural sector’s recovery remains sluggish, hindered by drought, rising production costs, and power shortages, which have significantly impacted Zimplow’s operations.
“We expect the effects of the drought to persist for at least another twelve months,” Manangazira added, emphasising the challenges facing the sector.
Mealie Brand, Zimplow’s agricultural equipment division, reported a steep decline in sales, with local volumes down 48 percent and exports dropping 57 percent. The delayed Pfumvudza inputs scheme exacerbated liquidity challenges for small-scale farmers, further dampening sales.
On a brighter note, Farmec recorded a modest 3 percent decline in revenue, with implement sales up 12 percent compared to last year. Tractor sales, however, fell 4 percent, attributed to supply chain constraints. Despite these challenges, Farmec captured 17 percent of national tractor sales and an impressive 44 percent share in the 81hp to 90hp category.
“Farmec’s proactive measures to ensure product availability have positioned the business well to navigate these supply chain disruptions,” said Manangazira.
Scanlink’s turnover dropped 19 percent year-on-year due to a 27 percent decline in truck sales, though bus sales surged by 367 percent. Service hours and parts sales increased by 5 percent and 15 percent, respectively, underscoring the unit’s resilience.
“The Scanlink order book for the remainder of 2024 remains healthy, and the business is profitable,” Manangazira confirmed.
Trentyre experienced a 31 percent revenue decline, with new tyre sales plummeting 39 percent. However, management’s focus on recapitalization and cost rationalization has improved retread supplies, providing optimism for a turnaround.
Tractive Power Solutions (TPS) achieved a US$1,4 million increase in revenue despite supply chain delays. Service hours rose significantly, and parts revenue surged by 956 percent year-on-year. CT Bolts reported a 2 percent revenue increase, although profitability fell by 48 percent, driven by higher administrative costs.
The commissioning of a new nail factory in October is expected to boost CT Bolts’ contribution in the final quarter.
Powermec’s revenue dropped 9 percent, impacted by a 37 percent decline in generator sales due to stock shortages. Nevertheless, solar installations grew by 500 percent and generator hire rose 125 percent. The business expects to return to profitability as stock availability improves.
Zimplow remains optimistic as the rainy season and improved liquidity from agricultural payments drive increased activity.
“We have reduced the cost of Mealie Brand ploughs by 23 percent, which we believe will enhance uptake locally and regionally,” said Manangazira.
“Stock levels are healthy across all business units, and our sales pipeline is robust.”
Powermec is positioning itself to capitalize on ongoing power deficits, while TPS and Develon earthmoving equipment maintain strong order books.
“The Group is committed to transformation, ensuring greater service levels at competitive prices to regain market share,” concluded Manangazira.
As Zimplow adapts to evolving market dynamics, its focus on cost efficiency and innovation promises a stronger outlook for 2024 and beyond.
Bongani Ndlovu