Home » General » Barzem, CT Bolts Weigh Down Zimplow

Zimplow Holdings’ performance in the quarter to March 2014 was mixed with profitability negatively affected by the downturn in its units, Barzem and CT Bolts.

Speaking at the company’s Annual General Meeting, Zimplow chief executive Mr Zondi Kumwenda said the economy remains hamstrung by tight liquidity constraints, high interest rates, and subdued performance by key economic sectors.

“Certain critical strategic alignments and adjustments are being pursued to turn around the Bolts division among others. The group’s profitability for the quarter was negatively affected by the downturn in Barzem and CT bolts.

“Volumes were again disappointing,” said Kumwenda.

The company experienced mixed trading patterns in its business units during the first quarter of 2014.

While volumes from agricultural divisions were encouraging, the mining, construction and bolts and nuts business units experienced downturn.

Earthmoving machines, lift-trucks and generators at Barzem were 70 percent down from last year.

He said most construction and mining activities started late due to late rains.

“The business unit has had a very unusually slow start to the season. Even after the rains, activities still remain subdued on the back of severe liquidity issues.

“In addition, service hours are down by 33 percent as most of our export labour has been placed,” Mr Kumwenda said.

Workshop hours for the group were up by 52 percent from prior year and Northmec tractor sales remained subdued, although workshop hours were up 51 percent on the previous year.

Tractor volumes from mechanical agricultural division of Farmec were 12,5 percent above last year. Mr Kumwenda said there was improvement in April, which was pleasing.

He said the current company performance statistics reflected that it has regained the previously lost market share in the higher horse power range in the tractor division.

Mealie Brand total implements volumes were up by 38 percent over last year, assisted mainly by export volumes.

The company saw improvements in local volumes in April and there is hope that this positive trend continues.

Spares in total were up 57 percent over the previous year with overall finance charges going down by 27 percent.

Mr Kumwenda added that it remains the group’s desire to reduce current borrowings, especially those brought about through acquisition of minorities.

“To this end the group is at an aanced stage of disposing some of its core assets, particularly those retained from disposed business units.

“Additionally, an asset based finance structure that is in place will release cash that was being trapped in acquisition of whole goods,” he said.

Low liquidity levels have also resulted in a number of customers for the company delaying settlement of their accounts, thereby inhibiting sales and re-stocking programmes.

Source : The Herald