We have extracted the financial summary from the full year abridged report of Zimplow Holdings Limited listed on the Zimbabwe Stock Exchange under the share code ZIMW.zw. Zimplow is a manufacturer and distributor of construction, infrastructure and agricultural sector products.
The following is an excerpt from the FY2018 Abridged:
The 2018 financial year was a successful one for the Zimplow Group drawing from growth in the national GDP and a resurgent agricultural sector. Group revenue went up by 25% from $39.1m to $48.7m. Success with cost containment measures saw the net profit percentage up from 9% to 12%. Net profits available to the shareholders were up by 76% from $3.4m to $6m.
Business unit Performance Review
Revenues went up 9% from $11.5m to $12.5m with the mix tilted towards more profitable local sales. Underlying volumes of local implements were up 19% to 43 490 with exports down 48% to 23 610. Due to effective cost management net profits went up 41% from $2.9m to $4.1m. Mealie Brand generated sufficient export sales to sustain itself as well as to fund other divisions of the group.
Revenues increased by 59% from $11.1m to $17.7m on the back of a strong showing in tractor sales. Tractor sales were up 75% from 95 units in 2017 to 166 units in 2018. Massey Ferguson tractors were 90% of the volume with Valtra making up the balance. Workshop hours sold were flat on last year at 11 716 hours. Net profitability for Farmec was up 145% from $1.1m to $2.7m.
During the year Farmec was recognised by the owner of the Massey Ferguson Brands (AGCO) and won the following awards for the 2017 year:
• Best overall distributor in Africa
• Best services / parts dealer
• Best Massey ferguson dealer in Africa
The whole group is proud of this recognition!
Revenue for Powermec was up 116% from $1.9m to $4.1m. Gensets were 80% of the turnover with parts and service making up the balance. We will look to increase the relative contribution of more predictable parts and service revenues to the total mix. GP margins were squeezed due to lower stock turn and consequently Powermec made a profit of $350k, which was up only 18% on prior year.
Revenues at Barzem were up 7% to $12.7m. While the sales mix of 40:60% between whole goods and parts/ service was good, profitability remains muted as the business currently operates at a fraction of its potential. Alignment of shareholder objectives and interests is the first step towards putting Barzem in a position to competently serve the local market. We are working at this.
Turnover at CT Bolts was up 20% from $1.5m to $1.8m with profitability up 96% to $724k. This remains a niche business and an increased focus on the northern half of the country has produced extra revenues and profits for the company.
We serve both the communal and the commercial farmer and the prospects of the agricultural season plays an important role in the life of Zimplow. On the mining side, we expect an improved performance from Barzem for the coming financial year on the back of parts and service.
The most important task that Zimplow’s Board and management have is the management of the balance sheet. Over the last two years we have achieved a malleable balance sheet structure where we are able to generate cash or assume a defensive posture in response to market conditions. We will take advantage of opportunities as they present themselves in the 2019 financial year.
Zimplow Holdings Limited is a Company Member of AfricanFinancials.com.