Padenga banks on improved US economy

HARARE - Zimbbwean crocodiles and alligators breeder, Padenga, is banking on anticipated recovery in the United States of America’s economy to boost its business.

The group’s chief financial officer, Oliver Kamundimu, yesterday said a growth in America’s economy bodes well for his company.

“We hope that (America’s President Donald) Trump will live to his promise of making America great again. This will result in the country having more millionaires who are able to buy our crocodile-skin products,” he said.

Trump claimed his policies would turbo-charge the economy to grow at a 4,0 percent annual increase in gross domestic product, more than double recent growth statistics since the end of the 2008-09 economic crisis.

For a few months after the election, this “economic confidence trick” appears to work as the United States stock market has been on a tear since the presidential election, with both the Dow Jones Industrial Average and S&P 500 indexes of stock prices hitting record highs on the strength of an over 10 percent increase since November 8, 2016.

Kamundimu hopes this trend will continue into the future to offset softening prices for watchband size skins.

“The United States alligator operation unit recorded turnover of $3,7 million, this being an increase of 155 percent against prior year,” he said presenting the group’s full year results to December 2016, adding that volumes were also 143 percent up in the period under review.

“Of the total skins sold, 7 994 were low quality skins harvested at the end of the prior year,” Kamundimu said.

The United States unit recorded an operating loss of $614 841 and a loss before tax of $1 675 835 compared to an operating loss of $236 866 and a loss before tax of $346 782 for the prior year.

Padenga — the world’s largest supplier of Nile crocodile skins for luxury handbags and shoes — operates an alligator farm in Texas.

In the period under review, Padenga slaughtered 47 806 crocodiles from its farms in northern Zimbabwe last year to meet demand for the skins worldwide.

The company’s biggest market for hides is Italy, the home of luxury goods makers including Prada Spa, which sells a crocodile and python-skin handbag for $4 098.

The group recorded an operating profit before depreciation, amortisation, impairment and fair valuation adjustments of $12,6 million from a turnover of $31,2 million in the 12 months to December last year.

“Cash generated from operating activities was down from $13,7 million in 2015 to $4,4 million in 2016. Thas decrease in cash generation was a function of an increase in debtors of $8 million and an increase in biological assets including fair value adjustments of $793 672,” Kamundimu said.

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