Zimplow Holdings, a diversified agro-industrial company, has announced new strategies aimed at restoring profitability by 2024, leveraging strong order books in the agriculture, logistics, and mining sectors.
In its financial report for the half-year ending June 30, 2024, the company revealed that its agricultural division faced significant challenges due to an El Niño-induced drought, resulting in reduced volumes across key units.
Acting Group Chief Executive, Willem Swan, stated that the company is now adopting a more focused sales approach, utilizing demand forecasting systems, direct marketing, and optimizing inventory and supplier management.
Zimplow, a manufacturer and distributor of products for construction, infrastructure, and agriculture, also produces metal fasteners for the mining, construction, and agricultural sectors and has interests in property management and leasing.
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To mitigate the drought’s impact, the company has implemented a cost-saving plan to maintain cash flow. These efforts include a group-wide staff rationalization and organizational restructuring aimed at separating business units for greater efficiency.
“Optimizing staff levels, reviewing overhead costs, and analyzing suppliers will enable our units to become more competitive, improving client service and driving repeat business,” Swan explained.
Additionally, Zimplow plans to sell off non-core residential and commercial properties valued at $2.75 million, with proceeds directed toward working capital for its mining and infrastructure divisions following the finalization of the Barzem deal.
The company is also focused on turnaround strategies for its agricultural and Trentyre units, including closing underperforming branches and refining product offerings.
Despite challenges, Zimplow’s agriculture unit, Farmec, saw lower turnover by 29% compared to last year but maintained a 20% market share in new tractor sales in early 2024. Supply chain issues, particularly the unavailability of the MF200 tractor series, affected performance in Q2, but the company expects improvements in the second half as supply resumes.
Swan also noted that Farmec secured a financing facility to make it easier for farmers to purchase tractors and equipment.
Mealie Brand’s volumes fell by 61% locally and 7% in exports, leading to a 45% decline in revenue. However, the unit is expanding into bulk mining supplies and small tractor implements to diversify its product range and reduce reliance on seasonal demand.
In the logistics sector, Scanlink’s strong order book for the second half of 2024 is expected to match 2023 turnover, with after-sales services growing by 15% year-to-date. Trentyre, however, saw a 27% revenue decline compared to last year.
In the mining cluster, Tractive Power Solutions (TPS) exceeded its 2023 turnover target, though delays in equipment deliveries impacted earthmoving equipment sales. Powermec anticipates strong demand for generator sets due to power shortages, with an extensive order book for the upcoming period.
During the review period, CT Bolts opened a new outlet in Msasa, showing steady growth. A nail factory set to begin production in October 2024 is expected to boost volumes across all branches.
Despite an 18% decline in turnover for the first half of 2024, Swan remains optimistic about the second half, citing strong order books, accessible financing for agricultural clients, and favorable weather forecasts for the 2024/25 cropping season.
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