Pride Mahlangu, Business Reporter
FARMING implements manufacturer, Zimplow Limited, says it is targeting niche opportunities and balance sheet management to consolidate positive performance and meet its full-year targets.
In a trading update for the third quarter ended 30 September 2019, Zimplow secretary, Mr Maxwell Chinorwadza, said most of the business units performed well despite the prevailing economic challenges.
“The general focus on the niche opportunities and the balance sheet management resulted in the solid performance recorded by the group. In particular, Mealie Brand export performance and Powermec’s generator sales have sustained the group’s bottom line,” he said.
“Despite the challenging environment, the group is on its course to meet its targets for the full year ending 31 December 2019.”
Mr Chinorwadza said positive performance at Mealie Brand and Powermec units spurred the group’s overall performance, counterbalancing the downward adjustment in demand for products in other business units in line with economic activity.
“The group’s diversified portfolio showed resilience despite the drought and prevailing economic challenges,” he said.
Zimplow’s subsidiaries include Mealie Brand, Farmec, Powermec, CT Bolts, and Barzem. During the period under review at Mealie Brand, total implement volumes were 13 percent ahead of prior year for the nine months year to date, said Mr Chinorwadza. He said export implement sales grew by 307 percent, helping to ameliorate the drop in the local demand for implements, which was 63 percent down on the comparative period.
Mr Chinorwadza said demand for their Perkins engine-driven generators also grew by 85 percent compared to same period in prior year. Service hours sold went up 28 percent against prior year, as Perkins engine-powered generators became the primary source of power for their customers.
“Farmec performance adjusted to the general economic climate as tractor sales volumes declined 45 percent for the nine months compared to the same period last year,” he said.
On the outlook, Mr Chinorwadza said the 2018/19 drought and the poor tobacco price yield impacted Farmec’s after-sales support as parts pieces sold dropped by 31 percent whilst service hours were 24 percent down for the nine-month year to date. Despite volumes for the nine month-period trailing behind the prior year, the posture of the business at Barzem has improved significantly. Earthmoving equipment volumes were 58 percent down against prior year albeit showing signs of recovery to year-end. Service hours were also 24 percent down against prior year.
CT Bolts registered high tensile steel bolt growth of 86 percent, offsetting the 57 percent drop in demand for mild steel.
“The business unit’s focus remains on increasing market share with a customer-centric value proposition,” said Mr Chinorwadza.
The board has since proposed an interim dividend of 3.14 cents per share payable in respect of all qualifying ordinary shares of the company to be paid out of the profits for the current financial year. Early in the first half of the year ended 30 June 2019, Zimplow’s growth in export sales led to a strong revenue performance. — @pridesinstinctz.