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,”
“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.