DIVERSIFIED firm, Zimplow Holdings Limited (Zimplow) has posted a 12% decrease in group revenue to US$20,6 million in the period ended September 30, 2024, as it reels from this year’s El Niño-induced drought.
Zimplow recorded a loss of US$1,66 million for its half-year period ended June 30, 2024 and announced that it would undergo a “staff rationalisation” exercise to cut costs.
The firm said the El Niño-induced drought had a significant impact on the group’s flagship business units within the agriculture cluster, which contributed 80,7% to the company’s loss position.
Apart from the agricultural segment, Zimplow operates in the mining and infrastructure equipment and service sector as well as the logistics and automotive sector.
“In the period under review, the group recorded revenue amounting to US$20,6 million, which was 12% below that for the comparative period last year,” Zimplow said in its trading update as at September 30, 2024. “This performance, although below prior year, improved in the period under review, with most business units showing a positive trend towards profitability from the commencement of the third quarter, against the backdrop of a loss before tax of US$1,4 million as at June 30, 2024.”
Zimplow expects that the effects of the drought will be felt for at least another 12 months in the agricultural sector and will be exacerbated by the shortage of power and increased costs of production.
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“All the above-mentioned factors and softer mineral prices, except gold, have cumulatively contributed to a lower than forecasted financial performance by the group,” Zimplow added.
Under its agricultural segment, the sales volumes at its Mealie Brand subsidiary, the largest manufacturer and distributor of animal drawn ploughs, harrows, rippers and planters in Zimbabwe, were down 48% in the period under review.
Meanwhile, export sales volumes recorded a 57% negative variance in comparison to the comparative period last year.
For Farmec, Zimplow said this subsidiary’s total revenue was 3% below previous year, with implements sales 12% ahead of the comparative period last year, while tractor unit sales were 4% below the 2023 third quarter volumes.
Farmec is the flagship for mechanised agriculture equipment in the group, holding franchise agreements for Massey Ferguson and Valtra tractors, combine harvesters as well as distributorships for Monosem, Vicon and Falcon implement ranges.
“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 [Grain Marketing Board] payments in the agriculture sector should lead to increased business volumes,” Zimplow said.
“Mealie Brand has successfully reduced the cost of its plough by 23%, and management expects further efficiencies to ensure successful uptake of Mealie Brand products both locally and in the region.
“The group is undergoing a transformation to effect greater service levels at more competitive prices in an effort to regain market share in the business-to-business sector against the emerging informal sector.”
Zimplow said stock levels were generally good and that the sales pipeline was healthy across all group business units.
“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,” it said.
“The response by the market to Develon earthmoving equipment has been very encouraging, leading to the sale of all available stock.
“Tractive Power Solution’s order book is strong for the remaining quarter of 2024. Scanlink has a strong order book to year end, spilling over into Q1 2025 with the supply of intermediate and luxury buses headlining.”