Financial Gazette (Harare)
Staff Reporter
22 August 2008
Harare — MEDTECH Holdings Limited has waived the declaration of a dividend in the half-year ending June 30 2008 as the Zimbabwe Stock Excha-nge-listed concern concentrate on maintaining the high standards expected of a medical manufacturing group.
Company secretary Frank Johnstone said the drug manufacturing MedTech had come under pressure "to generate cash to finance increased working capital" requirements and as such would not recommend the declaration of an interim dividend.
A number of companies have also taken the same position as they focus on preparing their operations for the worst economic times that lie ahead. The country's economy has suffered a recession for the past nine years and with dialogue between the protagonists -- ZANU-PF and the two factions of the Movement for Democratic Change -- failing to reach a political rapprochement, fears are that the worst is still to come. The economy has been plagued by high inflation, which surged to 11,2 million percent in June. The economy is also battling with foreign currency shortages, an erosion of disposable incomes, price controls, loss of business confidence and chronic water and energy shortages. As at June 30, MedTech was sitting on $75 trillion in short-term borrowings secured to prepay raw material purchases and hedge debtors.
"The year to date has been characterised by striving to increase operating cost efficiencies and ensure that the group's manufacturing facilities are maintained to the high standard required for a medical manufacturing group," Johnstone said in the statement accompanying the group's half year results.
Turnover for the group in the six months to June 30 reached about $382 trillion in historical terms. MedTech realised a profit before taxation of $257 trillion.
Because of the rapid deterioration of the country's economy, the quality and quantity of the country's industrial output has declined.
Across all sectors of the economy, consumers are buying goods that do not measure up to the required standards as manufacturers cut corners in order to contain costs.
But drug-manufacturing companies, operating under the eagle eye of regulators, have been battling to keep plants up to the required standards to remain in operation.
MedTech's major competitor, Caps Hold-ings has just completed the refurbishment of its facilities in Harare at a substantial cost.
Johnstone said the period under review was characterised by incre-ased difficulties in procuring critical raw materials, but the group was bailed out by the proceeds from its exports, which helped to source inputs at competitive prices.
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