Agricultural implements manufacturer, Zimplow Limited, saw revenue for the year to December 2020 rise by 17 percent as the volumes improved across most of its subsidiaries, but profitability fell due to higher operational costs as well as lower exports.
Zimplow’s revenue performance was 17 percent ahead of prior year despite the Covid-19 pandemic, which management attributed to “growth in volumes across the major product ranges at Farmec, Barzem, CT Bolts and Mealiebrand.”
In inflation-adjusted terms, group revenues closed FY2020 at $2,65 billion, up from $2,26 billion in the prior comparable period.
During the period under review, there was significant increase in cost of sales (12 percent), administrative expenses (52 percent) and a drop in exports weighed down on Zimplow’s profitability despite the increase in revenue.
Cost of sales increased to $1,83 billion from $1,63 billion during the year under review.
Profit for the year slipped to $230 million from a prior comparable year figure of $451 million.
The key exporting division — Powermec — suffered whole goods volumes reduction and exports sales were affected by Covid-19 induced lockdowns.
Said Zimplow chairman Godfrey Manhambara: “The reduction in export sales and related exchange gains due to Covid-19 lockdowns and the exchange rate stability following the introduction of the foreign currency auction trading system respectively, caused a decline in current year operating profitability by 41 percent compared to prior year.”
With regards to the performance of the group’s divisions, Barzem recorded an improved performance as revenue grew by 47 percent and operating profit by 8 percent, which was “driven by a four-fold growth in whole goods volumes,” said the chairman.
“We are encouraged by the effort to have Barzem as the dominant supplier of earth moving equipment. We continue to work together with our partners, Barloworld, to smoothen the supply chain and increase equipment uptake of CAT equipment in Zimbabwe,” added Manhambara.
“Barzem and Zimplow have made efforts to work closely with our customers through structured finance facilities from local asset finance institutions to enable uptake of the earth moving machinery.”
Barzem and Zimplow’s after sales performance has continued to improve with parts sales growing by 10 percent in real terms compared to prior year.
Management said the company lost time to Covid-19 resulting in an 18 percent drop-in hours sold compared to 2019.
The two business units’ contribution to Zimplow’s profitability stood at 20 percent.
Farmec posted an impressive performance with revenues growing 13 percent driven by tractor and implements volumes growth of 30 percent and 37 percent, respectively against prior year.
After sales revenues were 21 percent ahead of prior year.
The Mealiebrand division recovered in volumes with a 20 percent growth in local implements sold against prior year despite a slow start to the financial year.
According to management, Mealiebrand has maintained its position as the significant driver of the groups’ bottom line with a 33 percent contribution despite the reduction in export volumes.
CT Bolts recorded a 180 percent growth in revenue to close the year on $93 million. The segment’s volumes grew by an average of 55 percent across all product ranges.
“The various interventions of the previous years and the new management appointments in 2020 propelled the unit to these excellent results in a difficult trading environment,” said the group chairman.
“It is hoped that the unit will continue to grow and become a significant member of the group.”
Powermec recorded a 23 percent drop in revenue against prior year. Volumes were 20 percent down compared to prior year as power consumption switched from generators to the grid resulting in operating profit reducing by 50 percent.
For the year under review, the Zimplow board declared a dividend of $10,48 cents per share.