Zimplow navigates El Niño risks with caution

Source: The Herald – Breaking news.

Zimplow navigates El Niño risks with caution 
Mr Swan

Enacy Mapakame

Farming implements and earth moving equipment supplier, Zimplow Holdings Limited says it is adopting a cautious approach to business to navigate the El Niño drought-induced challenges into the second half of the year.

Strategies around cash generation, cost containment, and balance sheet preservation will be prioritised during the second half period and beyond.

Despite other factors like tight liquidity, the group is still upbeat about a turnaround, banking on increased activity in the mining sector, which is one of its key markets. 

“The current tight liquidity situation is expected to persist in H2, although there are encouraging signs emerging from the mining sector,” said acting group chief executive officer Mr Willem Swan.

“Gold prices are currently at a high level and showing stability, which is great news for the mining and logistics business units.

“Additionally, the upcoming opening of new mines presents promising growth opportunities,” he said.

The group is also committed to growing capacity at Mealie Brand and enhancing synergies between operating units to improve service levels, which should support the group’s growth trajectory.

Zimplow is also banking on its partnership with a new original equipment manufacturer (OEM) Develon, which has started making strides “and creating excitement in markets across Asia, Americas and North Africa.”

“Zimplow’s collaboration with Develon offers equipment solutions by offering well-priced units and after-sales service that is set to enhance productivity in the construction, agriculture, and mining sectors.

“Develon models are known for their exceptional performance, durability, comfortable interiors, impressive fuel efficiency, and versatile capabilities,” said Mr Swan.

This comes as the group also recognises the role of the mining industry in attracting foreign investment for the nation, boosting export earnings and employment creation. 

In light of this, Zimplow also indicated the importance of a product range suitable to enhance the efficiency and effectiveness of mining and construction companies in Zimbabwe. 

Meanwhile, Tractive Power (TPS) under its mining and infrastructure cluster, recorded a significant increase in service hours during the five months to May 31, 2024 although parts volumes remained flat compared to the same period last year.

Mr Swan revealed that the business took delivery of the first units of the Develon brand which were showcased at the recently held ADMA show where prospective customers showed interest in the product range of mining and construction equipment.

 Management anticipates that this will translate into sales in the second half of the year. 

Already, the business unit expects to take delivery of further units in July 2024 together with FAW trucks and is confident that it will meet its projections to year-end on the back of a growing order pipeline.

As for the logistics and automotive cluster, Scanlink continued to consolidate its market position in the Tier 1 segment. Truck and bus sales were 71 percent and 300 percent ahead of the prior year’s performance respectively.

Service hours and parts recorded positive variances of 13 percent and 92 percent respectively, in comparison to prior year performance.

The agriculture business was adversely affected by the impacts of the El Niño-induced drought which hit Zimbabwe and the Southern Africa region.

Volumes at both Mealie Brand and Farmec were depressed during the five months compared to the same period last year. 

Further declines for the cluster were, however, offset by gains in Valmec, which recorded a 250 percent jump in tractor sales units in the period under review in comparison to the same period last year. Implement sales also increased significantly during the period under review.

Although revenue for the period went down 20 percent, management remains upbeat about positive second-half performance on the back of the anticipated economic stability in the country.