DIVERSIFIED firm, Zimplow Holdings Limited, will implement cost-cutting measures that include a staff rationalisation exercise amid a tough economic environment. This comes after the firm posted a loss of US$1,66 million in the half-year period ended June 30, 2024, which may include layoffs.
Typically, rationalising staff includes either a company reducing the number of its employees or reorganising roles to improve efficiency.
The group posted a loss in the period under review from a profit after tax US$197 417 recorded in the comparable period last year..
However, the group is optimistic that by the end of the full year, its turnaround strategy would allow it to increase its profitability, leveraging its order book.
In a statement attached to the group’s financial results for the half year ended June 30, 2024, Zimplow acting chief executive officer Willem Swan said the group had pivoted towards a more targeted approach in generating sales.
The approach, he said, relied on system-driven demand forecasting, direct marketing and rationalisation of stock holding and suppliers.
“Rationalisation of staff and the group overheads structure, supplier analysis and verification of pricing and demand planning will enable the business units to compete more effectively, service clients more efficiently leading to greater customer satisfaction and repeat purchases,” Swan said.
“On the back of strong order books across the agriculture, logistics and mining sectors, the group is well positioned to return to profit by the end of 2024.”
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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.
Added to that, the low crop output coupled with reduced disposal income on the part of Zimplow’s customers saw a huge reduction in volumes across all business units within the cluster.
The group said management was actively pursuing business unit turnaround programmes particularly focused on the agriculture-related business units as well as TrenTyre.
Some of the interventions for business recovery include closing non-performing branches, consolidating branches to take advantage of synergies and product refinement or re-development to provide cheaper alternatives.
Other initiatives include putting the Mealie Brand factory under care and maintenance and exploring new product development for full and effective utilisation of the factory with a thrust to produce infrastructure related products and mining consumables.
Despite the loss-making position, the group was able to end the period withnearly double on every dollar of short-term debt leaving it in a liquid position.
“The 2024/25 agriculture season which is anticipated to be characterised by normal to above-normal rainfall patterns as well as erratic energy supply which is expected to worsen up to year end all present immense opportunities for the agriculture-focused business units as well as the alternative power related business unit,” Zimplow’s new chairperson Benjamin Kumalo said.
“Management is geared up to turn around the group back to profitability by year-end with the mining and logistics business units following through on their respective firm order book, while the agriculture business units will capitalise on the anticipated improved 2024/25 weather forecast through refining the supply chain to ensure product availability and improved agility in product support initiatives as well as the execution of the key strategic focus areas as mentioned above,” Kumalo said.
He said the board approved the disposal of residential and commercial properties worth US$2 753 000 which were identified as non-core assets among a property portfolio of US$7,5 million.
“Proceeds from the disposal of the assets will be channelled towards working capital to consolidate its position in the mining and infrastructure sector pursuant to the successful conclusion of the Barzem transaction,” Kumalo said.
“The properties earmarked for disposal were disclosed in the consolidated financial statements as ‘assets held for sale in terms of IFRS [International Financial Reporting Standards]’.
