Good performance across Zimplow Holdings’ units saw the group overturning a $2,42 million FY2016 loss to achieve a profit after tax of $3,44 million in 2017.
In a statement of the financials, group Chairman Thomas Chataika attributed the profitability to a good rainfall season, supportive Government policies as well as good internal strategy execution.
During the period under review, revenue grew 65 percent to $39,15 million compared to $24,19 million in prior year largely on increased sales and a significant improvement at Mealie Brand. “(The year) 2017 was an important year for the Zimplow Group with all our businesses returning to profitability and this was mostly a result of investments and actions of the last three years,” said Chataika.
The group divested out of non-core assets and paid down expensive debt and in the process retaining more out of every dollar of sales compared to prior year due to lower finance costs.
Overall, sales were at $36,68 million compared to $22,04 million while rendering of services revenue amounted to $2,3 million. Investment property and rental income for the year was at $165 935.
In anticipation of the tightening forex market, Chataika said the group curtailed foreign supplier credit and switched to a prepayment model.
“This has had the added benefit of achieving high quality sales and a shorter working capital cycle. As a result, the business had a very light average foreign liability exposure of about $150 000 throughout the year,” he said.
In terms of operations, Mealie Brand turnover went up a significant 114 percent to $11,9 million from $5,6 million in 2016 resulting in GP margins going up 18 percent, mainly on the back of factory efficiencies. Operating expenses were 17 percent lower and Chataika said the return to profitability was mainly on the back of the 100 percent increase in exports as well as a 57 percent increase in local sales volumes.
Farmec was also a significant contributor to revenue at $11,1 million, a 61 percent increase from $6,9 million in 2016. Tractor sales were up 42 percent to 95 machines, with hours sold in the workshops up 40 percent to 11 540 hours. Farming implements sold doubled to 307.
At Powermec, the business benefitted from increased visibility off advertising as the official distributors of Perkins engines as well as a return to the original business model, the sale of whole goods and follow up with parts and service. According to Chataika, Powermec revenue went up 62 percent to $1,9 million from $1,2 million in 2016 while generator sales increased 55 percent to 82 gensets with hours sold also up 36 percent to 1544 hours.
CT Bolts saw revenue increasing to $1,6 million from $1.1 million in 2016, a 40 percent increase. GP margins improved 12 percent as a result of better procurement. Chataika said notable sales mix at CT Bolts was the increase in nails sold by 49 percent to 18t.
CT Bolts remains the business with the highest operating leverage in the Zimplow Group and it also had the most positive response to focused stock procurement.
Barzem turnover was at same level as that of Mealie Brand at $11,9 million. The GP margins however went off 4 percent to 25 percent owing to sales that were skewed towards whole goods.
Chataika said with the group having a strong gearing to agriculture, mining, consytruction and infrastructure development, it anticipates increased volumes on new growth earmarked through the new administration across all sectors of the economy. — FinX.