BY TATIRA ZWINOIRA
CONSTRUCTION giant Masimba Holdings Limited says its ability to finish projects on its order book will hinge on government’s ability to tackle rife arbitrage activities in Zimbabwe’s foreign currency market.
Chairman Gregory Sebborn, who spoke as the foreign currency situation remains volatile, said the listed firm had upcoming deals in both the private and public sectors.
Access to foreign currency remains a challenge in Zimbabwe, where the central bank’s foreign currency auction system has struggled to meet demand.
The Reserve Bank of Zimbabwe introduced the foreign currency auction system in June last year to tackle the shortages, which have provoked an explosion of an expensive black market foreign currency market with healthy greenback stocks.
Sebborn noted that authorities’ actions in the coming months would determine how Masimba would perform.
The firm has been at the vortex of a huge reconstruction effort in Cyclone Idai-hit Manicaland province where billions of Zimbabwe dollars have been deployed to rebuild a region that was grounded two years ago as roads and other infrastructure sank after floodwaters swept ashore, with authorities ordering mass evacuations.
This year’s heavy rains have also created more opportunities for construction firms.
Sebborn said inflation-adjusted revenue for the year ended December 31, 2020 rose 248% to $5,2 billion, from $1,4 billion during the comparable period in 2019, as profit after tax grew 113% to $327,38 million.
“The foreign currency auction system has contributed to a stable operating environment, the continued improvement of which provides opportunities for implementation of long-term infrastructure projects,” Sebborn said.
“However, we urge the authorities to pursue appropriate policies that will mitigate the pricing arbitrage risks. “The group, as at reporting date, had a solid order book that included roads, mining and housing infrastructure and its execution thereof will largely be dependent on the sustenance of the current operating conditions as alluded to above. The order book is evenly balanced between the public and private sectors. The board remains alive to the current risks and opportunities and will maintain its value and growth strategy in 2021,” he added.
The earnings growth was driven by improved operational efficiencies on contracting projects and fair value gains realised on the revaluation of investment properties.
“The group’s net working capital improved to $454,9 million (2019:$316 951 651), while borrowings increased to $129,2 million (2019: $19,2 million), mainly to support strategic capital investments and working capital,” Sebborn said.