…as it recorded a 17% rise in FY2020 revenue
Farming implements manufacturer Zimplow says it recorded an encouraging performance and results despite the challenges posed by coronavirus pandemic in the year ended 31 December 2020 with revenue rising 17% ahead of prior.
Inflation adjusted revenue stood at ZWL$2.65 billion from ZWL$2.26 billion in 2019 driven by growth in volumes across the major product ranges at Farmec, Barzem, CT Bolts and Mealiebrand.
“Powermec suffered whole goods volumes reduction and exports sales were affected by Covid-19 induced lockdowns,” said group chairman Godfrey Manhambara.
The reduction in export sales and related exchange gains due to Covid-19 lockdowns and the exchange rate stability following the introduction of the foreign currency auction trading system respectively, caused a decline in FY2020 operating profitability by 41% to ZWL$321.92 million.
On operations, Barzem had an improved performance where revenue grew by 47% and operating profit by 8%. This positive performance was driven by a 4-fold growth in whole goods volumes.
“We are encouraged by the effort to have Barzem as the dominant supplier of earth moving equipment. We continue to work together with our partners, Barloworld, to smoothen the supply chain and increase equipment uptake of CAT equipment in Zimbabwe.”
After sales performance has continued to improve with parts sales growing by 10% in real terms compared to the previous year. However it lost time to Covid-19 causing 18% drop-in hours sold compared to prior year. The Business units’ contribution to the groups’ profitability stood at 20%.
At Farmec revenue increased by 13% on tractors and implements volumes growth of 30% and 37% respectively against the prior year. After sales revenues were 21% ahead of prior year.
“The introduction of the Massey Ferguson four-wheel drive tractors in the lower horsepower range in Zimbabwe and re-organization of the supply chain helped the business unit grow its volumes despite the Covid-19 pandemic disruptions,” he said. In the outlook, the unit is geared to service its customer needs to what is promising to be a good agricultural season.
Mealiebrand recovered in volumes with a 20% growth in local implements sold against prior year despite a slow start to the financial year. The business unit maintained its position as the significant
driver of the groups’ bottom line with a 33% contribution despite the reduction in export volumes.
Cost containment measures at the start of the year 2020 in response to the reduced demand from the 2019/20 drought season and the subsequent lockdowns in March 2020 helped in controlling costs and thus assist in maintaining the profitability levels at the same level as prior year.
CT Bolts revenue rose 180% to ZWL$93 million. Volumes grew by an average of 55% across all product ranges.
Powermec had a 23% drop in revenue against the prior year. In the current year, demand for power solutions were more linked to prime power requirements rather than standby power as in the prior year where the grid had constant power outages.
“Product mix for 2020 was skewed towards the medium sized range sets compared to the smaller sized sets in the prior year.” Volumes were 20% down compared to prior year as power consumption switched from generators to the grid resulting in operating profit reducing by 50%.
It declared a dividend of ZWL$10.48 cents per share.
Manhambara said the group is on course to conclude acquisitions of Scanlink, Tredcor Zimbabwe, Birmingham Road and Dagenham property. “These are expected to enhance the Group’s foot print in its chosen space,” he said.
Zimplow offered to acquire the entire shareholding of Unifreight Africa Limited’s shareholding in Birmingham investments and the 51% in Tredcor Zimbabwe held by Unifreight’s subsidiary Clan Services (Private) Limited in exchange for a total of 34 174 010 newly issued ordinary shares in the company.
After tax profit declined to ZWL$230.64 million from ZWL$451.37 million – Harare