We have extracted the financial summary from the full year abridged report of General Beltings Holdings Limited listed on the Zimbabwe Stock Exchange under the share code GBH.zw. General Beltings is a manufacturer and distributer of general-purpose and specialised reinforced conveyor beltings, and rubber and chemical products.

The following is an excerpt from the FY2018 Abridged Report:

Performance

Notwithstanding curtailed activity in the last quarter, the turnover at US$4.743 million was in line with prior year’s US$4.756 million with both Divisions complementing each other. Throughout the year, the company defended its market position through delivering a commensurate value proposition to its customers underpinned by improved operational efficiencies.

Gross profit at US$1.368 million was a 3 % improvement on the prior year’s US$1.325 million due to improved throughput in the Chemicals Division and a favourable product mix at the Rubber Division. Operating expenses at US$ 1.725 million were 3 % above prior year’s US$1.656 million despite inflationary pressure on expenses and partial reinstatement of salary cuts in the last quarter of the year. As a result an operating loss of US$323 000 was recorded against a prior year operating profit of US$6 000. Finance costs at US$243 000 were 24 % higher than the prior year’s cost of US$195 000 due to interest charges on legacy debt. Average finance cost was at 12 % per annum.

Divisional Performance

Rubber Division

Volumes at 257 metric tonnes dropped by 11% from the prior year’s 289 metric tonnes due to foreign currency constraints for raw materials procurement. Owing to the need to realign the business with the new operating environment there was limited invoicing despite a firm order book. The strategic partnerships enabled the Division to compete in the industry as improved efficiencies reduced costs and turnaround time. The turnover at US$2.317million was a reduction of 17% from prior year’s US$2.776 million as orders were carried over into the ensuing year. As a result gross profit decreased by 62% to US$181 000 when compared with the prior year’s US$471 000. Operating costs were 10 % ahead of prior year at US$659 000 due to inflationary pressure.

Chemicals Division

Turnover at Cernol increased by 37 % to USD 2. 424 million although volumes declined by 16 % due to a favourable product mix. The performance was underpinned by market consolidation in the traditional markets and benefits from the technical partnerships. Operating costs increased by 23 % due to the partial reinstatement of the wage cuts in compliance with statutory requirements.

Outlook

The market segments the company serves are poised for growth as Zimbabwe envisions to be an upper middle income country by 2030 driven by extractive industries, agriculture and tourism. The operating environment continues to evolve and the company’s recovery strategy is set to withstand the challenges ahead focusing on niche markets while taking advantage of improved efficiencies. The renewal of technical partnerships in the year and existing synergies within the company are expected to deliver improved performance in 2019.