Zimplow Holdings’ mealie brand capacitation project progressing well, expects new equipment

Business Writer

Zimplow Holdings Limited, a leading farm implements manufacturer listed on the Victoria Falls Stock Exchange says its Mealie Brand’s business unit capacitation project is progressing well, with new equipment expected to be commissioned in the third quarter of the year.

The project aims to enhance factory efficiencies and capabilities, enabling the business unit to broaden its product range for agricultural implements and mining consumables.

Acting CEO Mr Willem Swan emphasizes the importance of the initiative as a cornerstone for the business’s sustainability and future profitability

Despite the business unit’s revenue for the period ending December 31, 2023, being nine percent lower than the prior year, the setback is attributed to reduced export sales volumes resulting from the proliferation of a cheaper product from Asia.

However, the strategic capacitation project remains poised to drive positive outcomes in the near term.

“The launch of the two-wheel tractor and related implements during the period under review resulted in local sales revenue being at par with prior year. Implements sold in the local market were 23 percent  ahead of prior year whilst exports were subdued by 24 percent. The Business Unit’s (BU) revenue was nine percent  below prior year owing to lower export sales volumes due to the proliferation of a cheaper product from Asia”

” The BU has been following through on refining and reviewing the supply chain as well as production efficiencies to reduce the cost of production of the plough. In addition, the Business Unit has progressed well with the capacitation project with the new equipment expected to be commissioned in Q3 of FY2024.

“The capacitation project is expected to result in improved factory efficiencies and increased capabilities as the BU seeks to expand its product offering for both agricultural implements and mining consumables. This initiative is expected to anchor the business’ sustainability and profitability in the near future.”

The tight liquidity crunch and the late rains during the 2023/24 cropping season significantly impacted Farmec performance, with tractor units and service hours sold being 37 percent below the comparable period.

Mr Swan noted that Farmec is at an advanced stage towards the introduction of a comprehensive financing solution with a local financial institution for the benefit of its existing and prospective customers.

“Furthermore, the BU is following through on demand management through refining its supply chain.”

At Valmec which was officially launched on 29 September 2023, six tractors and ninety-two implements were sold in the period under review.

Management is confident that the Business Unit will be able to reach the alternate target market which was previously unattended to by existing Group BU’s through brand visibility and awareness initiatives.

Powermec Generator unit sales in the period under review were six percent ahead of prior year underpinned by the erratic power supply experienced in Q1 and Q3 of 2023.

However, Mr Swan said service hours and parts revenue were subdued by 20 percent in comparison to the same period in the prior year due to reduced call-outs during the period when power was stable.

Powermec is set to capitalize on the effects of the El Nino induced drought which is expected to witness severe power cuts through stock availability  and buttressed by a healthy order pipeline.

CT Bolts CT Bolts’ revenue was at the same level as prior year, while tonnage volume sales were depressed by six percent mainly due to the sales mix.

Pressure on margins and operating costs weighed down the operating profit by 83 percent compared to prior year.

Mr Swan noted that the Division is implementing various business development and growth initiatives targeted at the mining sector through collaboration with Mealie Brand’s capabilities through its capacitation project.

“The Division has also invested in the local production of nails and other related products to support the infrastructure and construction sector.”

Going forward, the Group expects to face headwinds in FY2024 as a result of the El Nino induced drought and the corresponding downstream effect and the impact of the soft mineral prices resulting in mines retreating or delaying expansion and capital expenditure spending.

However, he said the Group is insulating itself from the effects of these macro-economic factors.

“Management is confident that through executing its factory capacitation, the successful launch of the newly acquired OEM’s, the strategic business turnaround of the loss making entities as well as embarking on a Group-wide cost containment program, it will show commendable growth in revenue generation and profitability in 2024.”