|Despite the challenging operating environment presented by the impacts of Covid-19 pandemic and a challenging macroeconomic environment, the business’ revenue grew 10% over the period. This was largely due to positive performance in the gold division, as the crocodile and alligator divisions faced reduced demand and changing market dynamics.|
Padenga’s revenue figures stand to benefit from both the elevated gold prices and the increased volumes expected from the newly commissioned Eureka mine. USD18m is also expected to be used for the Pickstone Underground project which will help Padenga reach its goal of doubling gold volumes in FY2022.
Gold prices are expected to remain firm in the medium to long term owing to the prevailing global economic uncertainties and this will positively impact the gold division’s revenue generation.
Growing stockpiles of crocodile skins were marked down due to lack of demand for their size and quality in the international luxury market.
“The Alligator skins market remains depressed and oversupplied. Given the current volume of unsold stock skins of this species in the market and that of live alligators on farms, we anticipate this situation to persist for a minimum of four to five years,” the company said.
Moving forward, as pandemic effects become less pronounced, global economy moderates positively, we anticipate improved performance of the crocodile division.
Recovering disposable incomes and the opening of global supply chains supports this business’ rebound. The entity has already made advances into penetrating the Asian market and could result in further profit generation.
Belief is that the skins business has upward potential as it grows in line with the broader luxury goods market.
Whilst the quality of skins Padenga produced in 2021 improved significantly, low demand and low sales volumes resulted in below par financials in this unit.
Padenga is also considering ending the loss making alligator skin operation. This would allow the entity to focus on core businesses while also easing the loss burden the department had on the group. Additionally, plans to expand into plantation agriculture are also in the works.
The effects of the business’ plan to diversify into agricultural exports are yet to be quantified. However, as the business has highlighted intention to focus on high value export crops, there is potential for good return.
We remain confident in our strong fundamentals and we will continue to focus on preserving value while managing the risks triggered by the volatile external environment. The Group will return to profitability in 2022 – Harare