Zimplow Holdings revenue falls 12% as economic pre...

Zimplow Holdings revenue falls 12% as economic pressures mount

Audrey Galawu

Assistant Editor

Zimplow Holdings Limited has reported a 12% decline in revenue for the third quarter of 2024, generating US$20.6 million compared to the same period in 2023. The drop reflects the impact of inflation, currency volatility, and a severe drought that disrupted agricultural and economic activities across the country.

Despite the challenging environment, the group showed signs of recovery during the quarter, with several business units improving their performance as the year progressed.

Inflation rose sharply in the period under review, with month-on-month rates increasing from 1.4% in August to 5.8% in September 2024, according to the Zimbabwe National Statistical Agency. The weakened local currency further strained purchasing power, while the lingering effects of the drought intensified challenges for the agriculture-focused company.

However, Zimplow is poised to benefit from regional opportunities, particularly through the African Continental Free Trade Area, which recently approved Zimbabwe’s tariff schedules. This development could expand markets for the Group’s Mealie Brand products.

The agricultural sector bore the brunt of the drought, significantly affecting Zimplow's flagship Mealie Brand. Local sales volumes dropped 48%, while exports were down 57%. The delayed rollout of the Pfumvudza inputs scheme added to liquidity challenges for small-scale farmers.

Farmec managed to cushion the impact, with implement sales up by 12% compared to the previous year, though tractor sales declined by 4%. The company maintained its strong market position, accounting for 17% of national tractor sales.

Scanlink experienced a 19% revenue decline due to lower truck sales, though bus sales surged by 367%, and parts sales increased by 15%. Meanwhile, Trentyre's revenue was 31% below 2023 levels, with new tyre and retread sales significantly affected. Management is working on a cost-rationalization strategy to restore profitability.

Tractive Power Solutions bucked the trend, with revenue increasing by US$1.4 million, supported by a 956% rise in parts sales and higher service hours. The unit benefited from significant capital investment during the year.

CT Bolts achieved a modest 2% revenue increase, but rising costs led to a 48% drop in profitability. The commissioning of a new nail factory in October 2024 is expected to enhance performance in Q4.

Powermec faced a 9% revenue decline due to stock shortages, with generator sales falling 37%. However, solar installations rose by 500%, and generator hire increased 125%.