FARM implements manufacturer Zimplow Limited has warned shareholders and investors that the group's financial performance for the full year to December 31 2012 falls below expectations and that for the prior year. Zimplow said its financial results for the period to December 31 2012 would be below those achieved in the corresponding period in 2011 due to weather, economic and financial factors. As such, the firm has advised shareholders and investors to exercise caution when dealing in its shares.
The profit warning on anticipated below forecast financial performance, said Zimplow, is based on a preliminary review of the group's unaudited financial results for the year under review.
Zimplow had achieved US$2,5 million profit attributable to owners of the parent company in the period to December 31 2011 after registering 26 percent growth in revenue to US$15,5 million. The growth in revenue was driven by better local demand and revenue from a new acquisition.
The group cited a poor 2012 agriculture season characterised by poor harvests, and cotton price wars for a drop in volumes, late erratic rains that affected normal seasonal take-off for lower volumes and low disposable income and tight liquidity effect on revenue, as reasons for the poor results.
As a result, Zimplow said its agriculture division relied on exports, which traditionally have thin margins because of competition from the East. The farm implements maker added that the absence of long-term financing facilities affected the performance of some former TPH business units.
"The significance of the above factors, coupled with acquisition and restructuring costs of TPH, resulted in less than satisfactory financial performance than anticipated," said Zimplow in a statement.
Zimplow shareholders in January unanimously approved the company directors' proposal to buy out Tractive Power Holdings minorities to complete the acquisition of the company, a move management said would further consolidate Zimplow's dominance in the agriculture sector.
Earlier in the year Zimplow acquired 57,21 percent shareholding in TPH from the Reserve Bank of Zimbabwe-controlled Finance Trust of Zimbabwe, as the cetral bank sought to raise funds to retire its debts.
Zimplow contends that its acquisition of TPH would consolidate the company's position in the agriculture sector and benefit from the expected growth in demand for engine-drawn implements.
Further, the acquisition is also anticipated to increase Zimplow's participation in the mining sector through its Barzem Enterprises in what should further diversify the listed group's revenue streams.
However, Zimplow said the underlying business model remains very strong with a robust balance sheet backing up growth plans.
The group said it is in the process of realigning its operations into agriculture, mining and infrastructural equipment as a supplier representing world class brands. The group says it is working on accelerated reduction of inherited expensive debt.