Zimplow revenue down 19%, profitability drops 42% due to COVID-19

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Farai Mabeza

Manufacturing and distribution group, Zimplow Limited, recorded a 19% fall in revenue and a 42% drop in profitability in the first five months of the year due to disruptions brought about by the outbreak of the Coronavirus (COVID-19) pandemic.

According to the group’s trading update for the five-month period ending May 31, 2020 the interruptions have caused delays and postponements of projects which have resulted in depressed customer demand for its subsidiaries which supply farming, infrastructure and mining equipment.

“Our business has been negatively impacted by depressed customer demand due to a number of postponements in infrastructure development projects, and the delayed opening of the tobacco selling season. Hence, our overall revenues have been 19% behind prior year, in real terms, and 623% up in ZWL terms,” the company’s chief executive officer, Vimbai Nyakudya said.

Profitability declined in real terms by 42%, but up 368% in ZWL due to inflation.

“The first 5 months of the year have been characterized by the need to adapt to ‘the new normal’ of doing business, as governments’ together with industries try to resuscitate economic activity while limiting the spread of Coronavirus and its impact on communities,” Nyakudya said.

The drought and the erosion of disposal incomes by the hyperinflationary environment exacerbated the performance of the group’s agro-focused units, Mealiebrand and Farmec.

Farmec’s tractor volumes dropped 37%. Parts sold were 17% behind prior whilst service hours sold were 29% behind the same period last year. Implements sold at Farmec were 29% ahead of the previous year. Mealiebrand was further affected by the boarder lockdowns as it could not supply the export market. As a result, there was little activity at the division.

According to the update one of the group’s companies, BarzemCAT, showed a resilient performance despite the tough operating environment. Activity in mining and infrastructure projects drove CAT equipment sales to 450% growth against the previous year.

In terms of after sales, parts were 8% ahead of the prior year, in real terms and service hours dropped 14% due to time lost during the lockdown.

“Powermec also showed improved performance in spite of the stable on-the-grid power supply experienced during the national COVID-19 lockdown. Perkins generator sales were 6% ahead of the previous year. Parts sales improved 36% ahead of prior year, and service hours sold were 108% up.

“Our target is to make Powermec the go-to-partner in terms of power engineering, especially with regards to generator and solar power products and support, and we believe, with the improvement we have made so far, we are on course to achieve that,” Nyakudya said.

“CT Bolts business unit’s transformation continues to take shape, and we are seeing a positive volume response – specifically the unit has been 19% ahead of the previous year with both mild steel and high tensile steel bolts putting a strong performance”.

The group said it would continue to monitor the environment with the pandemic still ongoing.

“We continue to assess the environment’s suitability to safely deliver our services and goods to our customers as COVID-19 continues to impact the society and our communities. We are determined to reduce the impact of the pandemic amongst other challenges affecting the business environment,” Nyakudya said.

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