Hunyani changes stance on Softex

Published: 30 January 2014

MANUFACTURER Hunyani Holdings Ltd says it will no longer sell its subsidiary Softex Tissue Products (Pvt) Ltd. The disposal of Softex, which had initially been expected to have been concluded during the second half of the company's financial year, has been set aside.

In a statement accompanying the firm's results for the year to October 2013, Hunyani said it was now "considering other options".

"The sale did not materialise and the board is considering other options for this investment," said Hunyani.

Softex experienced a below par financial year due to intense competition and "product quality issues", but the group maintains that its brand awareness remains strong and is working on strategies to re-align the business.

Although remaining a strong local brand, observers posit that in the longrun Softex will continue to weighed down by intense competition as cheaper, high quality brands continue to flood the market mainly from China and neighbouring South Africa.

Without any strong protectionist measures in place Zimbabwe's imports are expected to balloon to $8,3 billion this year, from $7,6 bln last year, according to figures in the 2014 National Budget. Meanwhile, Softex's financial results (a discontinued operation) have been incorporated in the group's full-year financial statement.

In terms of overall financial performance, Hunyani's volumes for continuing operations increased by 9 percent, largely as a result of strong growth in tobacco related packaging products.

Revenue from continuing operations of $47,7 million grew by 5 percent compared to $45,5 million in the prior financial year.

An operating profit of $2,2 million, compared to $1,6 million in the previous financial year, was achieved, inclusive of gains on the sale of noncore properties, plant and equipment, restructuring costs and the fair value decrease on biological assets.

The company reported a profit before taxation of $1,9 million, an improvement from the prior year figure of $1 million.

Total comprehensive income attributable to members was $8,5 million, which was largely driven by property, plant and equipment fair valuations.

This was a significant upturn from the $12 000 loss registered in the 2012 financial year.
- bh24