Impressive set of finals from Zimplow

Impressive set of finals from Zimplow
Published: 24 February 2012 (1087 Views)
An impressive set of finals from Zimplow as the group continues to deliver a steady performance. The top line grew by 6% to $15.5 million supported by a 30% growth in domestic sales accompanied by a 17% growth in export sales and an additional contribution from a new acquisition, African Traction and Associated Technologies (AFRITRAC). Despite the widespread costs pressures from wages and utilities, the company managed to post first-rate Earning Before Interest and Tax (EBIT) growth of 25% indicating EBIT margins of 22.3%. Net finance income of $170,744 was generated on the back of a strong cashflow position. The Profit Before Tax thus amounted to $3.6 million, 24% up from the prior period whilst the attributable profit at $2.7 million was affected by a higher tax rate of 25% (compared to 20%) as the company did not manage to export more than 50% to qualify for the tax incentive. The EPS was unchanged at US0.01c due to a share swap for the Afritrac transaction. The company declared a $0.027 dividend payable 14 March 2012; the LDR is Friday 09 March.    

The balance sheet remains pristine, with nil gearing and a solid current ratio of 7.3x up from 6.9x. The company has had good payment patterns from its customers with all debtors within the 30 day range. Net cash generated from operating activities amounted to $1.8 million (FY2010: $2.2 million), whilst the closing cashflow was $3.9 million from $3 million prior year. There was no provision for the $420,027 investment with Renaissance Merchant Bank, as the company is hopeful that the amount will be recovered following recent developments at the Bank.   

In terms of production, the flagship unit, Mealie Brand recorded a 27% growth in total implements to 74,113 units, with domestic units sales registering a 46% growth as the company benefitted from the Protracted Recovery Programme (PRP) which enhanced sales.

Exports only grew by 8% to 31,724 units as drought in East Africa, delayed seasonal take-off and cheap products from the East limited exports. Spares units declined by 11% to 570,464 due to carryover stocks from 2010. Late rains and the liquidity challenges also suppressed revenue growth while local cost increases weighed down margins. CT Bolts operations recorded a mixed performance with certain products for example mid steel bolts recording a 22% growth to 118,674 kg whilst nails and miscellaneous recorded declines.  Tassburg has turned the corner although its contribution to the group remains small, management is happy that the division is no longer losing money. Afritrac which is involved in the importation and sale of animal drawn implements and tools, contributed $1.5 million and $145,000 to turnover and PBT in its 10 months of trading post the acquisition. Zimplow controls 49% of the latter after a $552,000 share swap was made at US6.00cents/share.

The group's major cost drivers are, employment costs after a 20% increase was effected. Steel prices also increased by an average of 33% as heavy snow in the US and Europe caused shortages of scrap, thereby affecting global prices. Fuel prices also rose by 15% in January 2011, leading to an increase in haulage costs. On the outlook, more cost pressures are expected to come from huge wage demands and higher utilities charges. The erratic rainfall patterns in the region are also a concern. The company has made entry into countries such as Angola and Sudan and continues to pursue growth strategies both locally and in the region. Funding options could involve cash or share swaps.

Zimplow continues to display attributes of a well run entity. Its strong balance sheet is likely to support the planned growth strategies. The company has strong market dominance, commanding between 85% and 90% of the Zimbabwean market and 60% of the Zambian market. The quick return to functionality of Zim Steel might aid raw material costs for Zimplow. Steel prices in the Southern African region remain high compared to prices in Asia and average about $600/tone in China compared to $1,000/tonne in the Southern Africa region. For FY 2012, management is forecasting a 20% and 15% growth for the topline and bottomline respectively, which implies an undemanding  PER+1 of 8.8x. 

- Byo24News


You May Like These Videos


There are no comments.

Latest stories

Mnangagwa's advisors turn against Trevor Ncube

by Mandla Ndlovu | 20 April 2019 | 46 Views

MDC Structures keep the dream alive, the Jewel of Africa returns

by Jacob Mafume | 20 April 2019 | 39 Views

Mnangagwa wedged between a rock and hard place

by Editorial - Daily News | 20 April 2019 | 40 Views

Chamisa demands face to face meeting with Mnangagwa

by Staff reporter | 20 April 2019 | 68 Views

PHOTOS: Bulawayo - Nkayi road construction

by Social media | 20 April 2019 | 64 Views

Credible team and sound advice ahead of Elective Congress

by A big Easter by Tinashe Eric Muzamhindo | 20 April 2019 | 54 Views

South Africa and Zimbabwe turn a blind eye

by Sipho Ndlovu | 20 April 2019 | 51 Views

If its about us let us know

by Thomas Murisa | 20 April 2019 | 47 Views

ZAA Canada announces inaugural nominees

by Staff reporter | 20 April 2019 | 55 Views

Mnangagwa scared of death via political foul play

by Itai Mushekwe | 20 April 2019 | 60 Views

VACANCY: Thomson Reuters Foundation is employing

by Mandla Ndlovu | 19 April 2019 | 155 Views

Mohadi goes to court, seeks protection against ex-wife

by Staff reporter | 19 April 2019 | 204 Views

Gukurahundi cannot be wished away: Williams

by Staff reporter | 19 April 2019 | 148 Views

ZANU PF MP and Zhuwawo agree with Chamisa

by Mandla Ndlovu | 19 April 2019 | 309 Views

Can Zimbabwe manage to de-dollarise?

by Victor Bhoroma | 19 April 2019 | 132 Views

Why Mthuli Ncube's new currency is likely to be doomed

by Martin Tarusenga | 19 April 2019 | 121 Views

Rebirth of the Zimdollar

by Paddington Masamha | 19 April 2019 | 139 Views

Gukurahundi healing, reconciliation timeframes set

by Staff reporter | 19 April 2019 | 112 Views

Angry Mnangagwa lashes 'unpatriotic and inhumane' forces

by Staff reporter | 19 April 2019 | 116 Views

India, UAE roped in to revive CAPS, Datlabs

by Staff reporter | 19 April 2019 | 100 Views

Zimbabwe civil servants demand fresh wage negotiations

by Staff reporter | 19 April 2019 | 107 Views

Police, courts corrupt, says Mnangagwa

by Staff reporter | 19 April 2019 | 101 Views

Welshman Ncube not presidential material, MDC structures

by Staff reporter | 19 April 2019 | 105 Views

'39 years on Matebeleland still lags behind'

by Staff reporter | 19 April 2019 | 99 Views

Mnangagwa, Mugabe carefully planned Gukurahundi genocide

by Staff reporter | 19 April 2019 | 101 Views

Mnangagwa's fear over Gukurahundi

by Staff reporter | 19 April 2019 | 102 Views

Mnangagwa to launch Command Bakeries across the country

by Staff reporter | 19 April 2019 | 101 Views

Fake projects scandal: MP Musikavanhu plots to steal CDF

by Staff reporter | 19 April 2019 | 114 Views

Zanu-PF youths in solidarity march

by Staff reporter | 19 April 2019 | 113 Views

Rigging, vote-buying alleged at MDC Alliance provincial congress

by Staff reporter | 19 April 2019 | 99 Views

Judge blasts State over Chivayo appeal

by Staff reporter | 19 April 2019 | 98 Views

Zimbabweans told to brace for thunderstorms, wet Easter

by Staff reporter | 19 April 2019 | 107 Views

Zimbabwe will rise again, dreams Mnangagwa

by Staff reporter | 19 April 2019 | 90 Views

Fire leaves Guinea Fowl High teachers homeless

by Staff reporter | 19 April 2019 | 92 Views