Hwange Colliery Ltd has reported an after-tax loss of 65% for the first quarter ended March 31, 2020, owing to high inflation, as well as shortages of fuel and foreign currency.
During the same quarter, the company's sales decreased by 33%.In a trading update, Hwange's acting company secretary Rugare Dhobbie said despite having experienced challenges in the period under review, the company recorded an increase in production and revenue by 50% and 860% respectively.
"The operating environment continued to be challenging and has been characterised by high inflation, fuel shortages and shortage of foreign currency. The company has obsolete and redundant machinery due to insufficient foreign currency as a result of low retention and low export volumes as well as poor interbank forex availability," Dhobbie said. "In spite of the challenging operating environment, the company recorded increase in production volumes by 50%, a revenue increase of 860%, gross profit percent increase of 22% and net loss decrease of 65% for the three months ended 31 March 2020 compared to the corresponding period in 2019. The sales volumes however decreased by 33% for the same period."
Dhobbie said due to the Covid-19 pandemic which broke out during the same quarter, the company's profitability outlook for 2020 could not be "estimated to a reasonable degree".
"Due to the nature of the pandemic, the already challenging operating environment in the country and the uncertainty surrounding the extent and duration of the lockdown restrictions, the impact on the company's profitability in 2020 cannot be presently estimated to a reasonable degree," the statement read.
The coal miner is targeting regional markets such as Zambia, Democratic Republic of Congo, Malawi, Mozambique, Botswana and South Africa and must overcome poor logistics to benefit from these markets. Engagements with key logistical partners such as Beitbridge-Bulawayo Railway, National Railways of Zimbabwe and Zambia Railways Limited are ongoing to ensure the whole value chain is smoothened and that Hwange Colliery coal remains competitive on the export market.
Hwange Colliery was placed under administration in terms of the Reconstruction of State-Indebted Companies Act (Chapter 24:27) on October 26, 2018 and its listing on the Zimbabwe Stock Exchange was suspended on November 2, 2018.