Zimplow plans to dispose more assets

HARARE - Listed agro-implements manufacturer Zimplow Holdings Limited (Zimplow) plans to dispose its remaining non-core assets to raise funds to reduce borrowings.

The group, which recently offloaded its engineering unit Tassburg together with motoring subsidiary Puzey & Payne for nearly $2 million, is set to sell its property in the Harare CBD.

Zondi Kumwenda, the group’s chief executive, told shareholders at an annual general meeting last Friday that the transactions were at an advanced stage.

“It remains the group’s desire to reduce current borrowings especially those brought about through the acquisition of minorities,” he said.

Kumwenda noted that the Zimbabwe Stock Exchange-quoted group — which recently acquired Tractive Power Holdings from the Reserve Bank of Zimbabwe — was modelling its business in line with international trends.

“We are changing certain business models in some units to suit the environment for example, taking advantage of opportunities from small suppliers and making ourselves more nimble-footed to be able to adapt to changing market conditions, but the bigger business model will remain the same,” he said.

He added that Zimbabwe will in future be dominated by businesses with “strong roots and foundations, and that can adapt to market environment changes”.

“We think the farming sector world-wide and agriculture in this country in particular, will be the mainstay of the economy and mining will be supported by agriculture in terms of development. We do not believe there will be a seismic shift in the sectors in which Zimplow operates, but we will be able to continue to adjust accordingly,” he said earlier in the year.

Zimplow enjoys a relationship with world leading United States-based manufacturers such as Caterpillar in the Barzem division, as well as Arco of the US that holds the Massey Ferguson, Challenger and Vicon brands.

The farming implements maker is the only company that holds these three franchises under one roof for Arco, unlike other suppliers elsewhere.

Meanwhile, in a trading update Kumwenda said the group experienced mixed trading patterns during the first quarter of 2014.

“While volumes from key agricultural divisions were encouraging, the mining, construction and bolts and nuts business experienced a downturn,” he said.

Tractor volumes from mechanical agricultural division, Farmec were 12,5 percent up on last year. “There was a further improvement, in April which was pleasing and current statistics reflect that we have regained our previously lost market share in the higher horse power range,” said Kumwenda.

He said workshop hours were also up 52 percent from prior year. At Northmec division, tractor sales remained subdued although working hours were up 51 percent last year.

Mealie Brand implements volumes were up 38 percent compared to the same period last year due to increased exports. “We saw improvements in local volumes in April, and we hope this positive trend continues,” he said.

Spares were up 57 percent compared to last year. Barzem, the earth-moving subsidiary, sales were down 70 percent from last year.

“The business has had a very unusually slow start to the season. Most construction and mining activities started late due to late rains, but even after the rains, activity still remains subdued at the back of severe liquidity issues,” said Kumwenda.

He said CT Bolts volumes were “disappointing again,” recording an overall reduction of 24 percent while plans are underway to turnaround the division.

The group’s profitability for the quarter was negatively affected by the downturn in Barzem and CT Bolts, Kumwenda said without elaborating.

Overall, finance charges were down 27 percent.

 

 

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