Agriculture and mining tools supplier Zimplow Holdings Limited is optimistic that the government’s push on infrastructure development, increased agricultural and mining production will boost demand for the group’s products and services, leading to earnings.
The government aims for an upper-middle-income economy by 2030.
This growth will be driven mainly by the agriculture and mining sectors, which are the anchors of Zimbabwe’s economy.
In mining, the government has already set an annual revenue target of US$12 billion for the sector in 2023.
For Zimplow, the onset of the rainy season will also generate demand for its products in the agricultural segment and help boost earnings for the entire year.
“The impending rainy season will drive demand for products and services within the group’s agricultural cluster,” company secretary Ms Sharon Manangazira said in a trading update for the quarter to September 30, 2022.
“Furthermore, the continued national strategic focus on infrastructure development, coupled with the central government’s continued increase in mining sector output, augurs well for the group’s logistics and automotive cluster and mining and infrastructure cluster.
“Management will use the increase in activity in the fourth quarter of 2022 in the economic sectors in which the group operates, namely agriculture, mining and logistics, to achieve improved levels of profitability,” she said.
During the third quarter, the group posted an 11% year-on-year increase in revenue, albeit in a challenging environment.
Within agricultural equipment and services, Farmec saw tractor and implement volumes decline by 4% and 9% respectively, but the group is optimistic about the unit’s performance as the farming season gets under way.
Mealie Brand has seen a 26 percent increase in the supply of export gear to its clientele in the region compared to the same period last year.
“The company has foreseen the introduction of a number of new products for the fourth quarter of 2022 to increase its revenue,” Ms Manangazira said.
In the mining and infrastructure equipment and services business, Barzem operated largely under care and maintenance and ceased to be a CAT distributor by the end of the quarter under review.
CT bolts saw a 1 percent decline in volumes compared to the same period last year, but the company continues to penetrate new markets in various economic sectors.
At Powermec, erratic power supplies have driven the demand for alternative energy sources such as solar power and generators.
As a result, sales of parts and services increased by 24% and 70%, respectively, compared to the same period last year.
In light of this, Ms Managazira said the group expects volumes and revenues to increase in this segment.
She said: “The company continues to actively pursue increased business volumes for its solar energy products given the persistent power outages currently occurring across the country.
“The group expects to record significant revenue in this regard for the remainder of this financial year.”
During the period under review, the logistics and automotive products and services industry saw solid performance, with Scanlink registration parts sales volume up 7% and service hours up 9%.
At Trentyre, commercial and consumer tire retread volumes were up 60% year-on-year.
Zimplow installed a second chamber during the quarter under review for retreading purposes, and management is optimistic that this development will increase production.