Zimplow says it is optimistic about recovery in 2025 driven by anticipated improved rainfall in the 2024/25 summer cropping season, and a strong order book expected to spill over into the first quarter of next year.
The optimistic outlook is particularly significant considering the company has recently navigated one of its most challenging performance periods in over five years.
Notably, Zimplow recorded its first operational and after-tax loss since the reintroduction of the Zimbabwe dollar in 2019.
The company's primary brands, including its well-known Mealie brand, have encountered substantial hurdles, most prominently the severe drought that has afflicted the region, the worst in four decades.
The drought was exacerbated by significant currency depreciation, which drastically reduced consumer purchasing power, creating additional challenges for the company.
It also led to hesitancy among farmers, particularly regarding necessary equipment purchases.
"The onset of the rainy season has brought about a higher level of positivity across the economic sectors that the Group operates in. Increased liquidity from wheat deliveries and timeous GMB payments in the agriculture sector should lead to increased business volumes.
"Powermec continues to position itself to take advantage of the current power deficit in the provision of both solar products and generators. Management believes the current power deficit will continue up to April 2025.
"Scanlink has a strong order book to year-end, spilling over into Q1 2025 with the supply of intermediate and luxury buses headlining," said Mrs Sharon Manangazira, group company secretary, in the company's third quarter trading update to September 2024.
In light of these formidable challenges, Zimplow has proactively implemented several cost reduction strategies.
Zimplow achieved a 20 percent decrease in the cost of ploughs by streamlining operational processes, effectively avoiding the need for significant retooling of equipment.
This strategic adjustment reflects the company's commitment to remaining competitive despite adverse market conditions.
However, not all efforts to mitigate the impact of these challenges have been successful as other segments of the business that were intended to provide relief are now facing difficulties due to an influx of low-cost products originating from China and India.
To navigate a competitive environment, also characterised by porous borders and low-cost alternatives, Zimplow recognises the need to strike a balance between implementing price reductions and maintaining product quality.
Furthermore, Zimplow is actively collaborating with its suppliers to drive down expenses, which has enhanced its position in the marketplace.
Zimplow's logistics segment has also felt the pressure of competing against cheap products from China, which are significantly priced lower than Zimplow's European-standard trucks, such as those produced by Scania.
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To bolster its competitive standing, the company has successfully secured a first-class distributorship with FAW, a leading vehicle seller in South Africa, broadening its operational capabilities and market reach.
Despite these efforts, Zimplow must remain vigilant and reinforce its cost management strategies, particularly as forecasts suggest the likelihood of another drought -- albeit with expectations of higher rainfall.
This situation could perpetuate low disposable income levels among farmers, further challenging the company's revenue potential.
