adminBusiness Reporter
FARM implements manufacturer Zimplow Limited will tomorrow seal a US$5 million line of credit from Brazil in what is expected to boost volumes at the group’s tractor manufacturing division. Group chief executive Mr Zondo Kumwenda told the Herald Business in an interview that the parties to the deal will meet in South Africa tomorrow for the signing of the line of credit from Brazil.
“The final signatures will be done (with the financiers) on the 26th (Thursday) of this month. We are going to use the loan to buy tractors and a few other implements,” said Mr Kumwenda.
He said tractor volumes were lower this year compared to last year and the group was looking forward to seeing how the US$5 million line of credit would help push the volumes up.
The Zimplow boss added that capacity utilisation was low at the firm’s manufacturing division but volumes have been higher in the construction and animal-drawn equipment divisions.
The Zimbabwe Stock Exchange listed group has attributed the low volumes at some of its divisions, particularly manufacturing and tractors, to the liquidity crunch pervading the entire economy.
Zimplow has also recently been realigning its operations and this year completed the disposal of motor vehicles trader Puzey & Payne with the sale of Tassborg to be completed soon.
While Tassborg remains relatively profitable, its size and contribution to the group remains disproportional to the effort and time spent by directors on its operations hence the decision to sell it.
Addressing an analyst briefing in Harare recently, Mr Kumwenda said he expected the Government’s pro-agriculture and infrastructure policies to positively impact the group’s operations.
Zimplow is made up of Tractive Power Holdings, fully acquired early this year having been owned 57,2 percent since August 2012, Farmec, 65 percent owned joint venture Northmec, earthmoving equipment dealer Barzem, animal-drawn implements unit Mealie Brand and CT Bolts.
The group’s revenue rose to US$20 million in the interim to June 2013 from US$4 million in the same period last year after it acquired Tractive Power Holdings midway through 2012 and disposing of Puzey & Payne. Profit for the half year came in at US$1,4 million from US$168 000 last year.
Group earnings before interest tax depreciation and amortisation came in at US$1,19 million, most of which is attributable to the mining and construction equipment supply business. Profit before interest and tax of US$2,2 million was enhanced by sale of Puzey & Payne.
In the face of growing debt collection challenges, Zimplow has changed its sales strategy from credit to cash amid tightening liquidity conditions pervading the entire domestic economy.
Mr Kumwenda said Tractive Power Holdings performed extremely well in the half-year period, adding that the draught power implements maker and supplier positively contributed to the group.
Online Reporter