Zimbabwe: Zimplow Bullish About Fourth Quarter Outlook

17 November 2021

Agriculture and mining implements manufacturer, Zimplow Holdings, strongly believes the anticipated good 2021/22 agricultural season and growing infrastructure projects across the country will boost its business during the fourth quarter of the current financial year.

Zimbabwe Stock Exchange (ZSE) listed Zimplow's products range includes tractors, earth moving machinery, energy equipment as well as trucks and buses.

Group company secretary Charles Chaibva also highlighted that firm metal prices on the global market were an added advantage for the firm as it looks at delivering its strategy and targets for the financial year.

"The prospects of a good agricultural season, continued growth in infrastructure development projects as well as firm global metal prices offer a good platform for a strong fourth quarter performance.

"However, the group will continue to trade cautiously given the challenging trading environment," said Mr Chaibva in a trading update for the nine months to September 30, 2021.

During the third quarter to September 2021, the group recorded a resilient performance as volumes rose across segments albeit the challenging environment due to the effects of Covid-19.

Said Mr Chaibva: "Third quarter (Q3) was characterised by a challenging trading environment with month-on-month inflation growing by 1 percent to 4,73 percent in September 2021 compared to June 2021."

Revenue for the period went up 45 percent while profitability rose 61 percent compared to the same period in the prior year.

On a year to date basis, revenue and profitability were ahead of prior year by 62 percent and 61 percent respectively.

Operationally, Farmec had a good performance which saw revenue jump 82 percent compared to the same period in the prior year on strong tractor demand, implements and after-sales performance.

Tractors segment recorded a volume growth of 86 percent while implements were 56 percent firmer. Parts sales and capacity also improved by 19 percent and 26 percent respectively against the prior year comparable period.

At Mealie Brand, local and export implements sales for the nine months to September went up 37 percent and 30 percent respectively compared to the same period in 2020.

"The projected normal to above normal rainfall for the 2021/22 summer season and the recovery of export markets owing to the easing up of lockdown measures in the region provides a boost for Mealie Brand performance as we enter the fourth quarter of the 2021 financial year," said Mr Chaibva.

Sales volumes for earth moving equipment at Barzem went up 42 percent as workshop efficiencies also improved by 50 percent compared to the same period last year. According to the group, performance under this segment was driven by major on-going road rehabilitation programmes.

CT Bolts also maintained a growth trajectory with a 56 percent jump in tonnage of fasteners sold for the nine months compared to the same period in 2020.

Revenue at Powermec for the nine months to September went up 17 percent driven by improved after-sales business.

The segment however, had a challenging period due to reduced reliance on standby power although the third quarter saw a steady growth in demand "as the grid became unreliable."

Volumes in gensets and solar equipment were 37 percent below the prior year comparable period.

At Scanlink, profitability rose four-fold driven by strong demand in after-sales although truck and buses volumes were however, depressed due to supply chain gaps resulting in third quarter volumes dropping by 31 percent.

Trentyre's third quarter performance was driven by a 14 percent growth in volumes with new tyres rising by 23 percent while ancillary services grew by 12 percent against the same period last year.

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