Zimplow expecting lower profits

Published: 10 June 2013

THE Zimbabwe Stock Exchange-listed Zimplow has issued a profit warning advising that its results for the year ending 31 December 2012 would be lower than those achieved the previous year.

Company secretary Mrs Design Mkonto said financial results for the period ending 31 December 2012 would be lower largely due to a poor 2011/12 agricultural season.

In the financial year ending 31 December 2011, the group posted a $2,7 million profit after tax.

She said the 2011/12 agricultural season had been characterised by poor harvest and cotton price wars that saw local sales units dropping.

"Late and erratic rains for 2012/13 season affected the normal seasonal off-take resulting in lower local volumes," she said.

Mrs Mkonto said low disposable income and the tight liquidity situation in the market had also continued to affect local revenues.

The profit warning was based on a preliminary review of the unaudited financial results of the group for the year ending 31 December 2012.

The group's agriculture division has relied heavily on exports that traditionally have thin margins because of competition from the East.

"Absence of long-term financing facilities affected the performance of some former Tractive Power Holdings (TPH) business units which had been financed through expensive short-term debt," said Mrs Mkonto.

Mrs Mkonto said the group's business model remained very strong with a robust balance sheet backing up growth plans.

The group, she said was in the process of realigning its operations into agriculture, mining, and infrastructural equipment as a supplier representing world class brands.
- TH