PG records loss, again

HARARE - Listed building materials manufacturer PG Industries Zimbabwe Limited (PG) has registered a third consecutive loss since dollarisation in 2009, triggering fears of the company’s imminent collapse.

The group — which has a $29 million market capitalisation — recorded a net loss of $7,9 million in the year to December 2012 worsening from $5,7 million incurred in 2011.

During the period under review, consolidated net sales slumped 15,3 percent to $33,6 million.

The group’s current liabilities exceeded current assets by $6,7 million as it continued to face working capital constraints, particularly in the first half of the year.

Hillary Munyati, PG’s chief executive, said to ensure continuity, the group was planning to rationalise and consolidate existing structures.

“This is expected to result in a significant reduction in overheads,” he said.

Munyati said as part of cost cutting measures, the company relocated its head office and will also reduce its branch network.

To that effect, PG shareholders approved the disposal of the group’s investment in an associate company with a book value of $2,4 million to fund remaining operations and reduce borrowings.

“They (shareholders) also agreed to the disposal of excess-to-requirements properties valued at $4,9 million. Proceeds will be used to improve working capital at operating units,” said Munyati.

PG’s local and regional operations continue to be affected by the prevailing liquidity crisis that has hit the economy due to depressed foreign direct investment inflows, weak economic activity and clogged lines of credit.

Last year, PG’s merchandising gross sales declined by nine percent to $22,8 million due to inadequate working capital.

However, PG Timbers and PG Mozambique sales improved from 26,8 percent to 29,4 percent as a result of enhanced product mix.

Munyati said after successfully commissioning a new tile factory in December 2011, Zimtile turnover increased by 16,7 percent to $8,9 million.

First half performance was depressed due to insufficient working capital. Increased competition resulted in prices of roofing tiles weakening,” he said, adding that gross profit percentage however, improved from 15 percent to 24 percent through increased efficiencies and higher productivity.

“Glass operations sales remained flat at $2 870 047 due to continued working capital challenges. The division incurred an operating loss of $117 258 compared to a break even position in 2011,” said Munyati.

He noted that the supply of glass improved in the last quarter of 2012 following the conclusion of a purchase supply agreement with an international supply chain company.

“Shareholding in Manica Boards and doors reduced from 60 percent to 27,9 percent following a rights issue at the beginning of 2012. The remaining investment was accounted for as an associate company,” he said.

Share of loss of associate company amounted to $959 415.

PG is a manufacturer of fibre board, particle board and safety glass and distributes board glass, timber and related building materials through its network of outlets and third parties in domestic, regional and international markets.

The group’s share price traded at $0,06 on the Zimbabwe Stock Exchange yesterday. - Business Writer

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