General Beltings Limited, the listed producer and supplier of mining industry conveyor belts, says it has slashed the price of its products by 30 percent since the beginning of the year, as it moves to take on stiff competition from cheap South Africa imports.
Softening regional currencies against the United States dollar have encouraged most Zimbabwean firms, which use the greenback as the anchor currency, to focus on maintaining the domestic market in the face of competition from the region whose products land cheaply.
General Beltings estimates that $18 million worth of imports flooded the local market last year, which could easily have been generated by domestic manufacturers.
“Imported competition aided by weakening external currencies pause a serious challenge to the business,” chief executive officer, Wilbrod Tsuro told shareholders at an annual general meeting in Harare.
“We have implemented a 30 percent price reduction to date,” said Tsuro, who added that the firm, which also produces industrial rubber products and chemicals, had benefitted from the strategy as major mines were now running on the firm’s conveyor belts.
General Beltings has also been boosted by a campaign for domestic firms to buy local products, while new regulations to limit imports were expected to drive recovery in the second half of the year.
“We are still slightly expensive compared to imported conveyor belts but we are moving towards convergence in pricing,” said Tsuroh, who noted that order turnaround had improved to about one month, from three months.
“We have eliminated technical concerns such as safety in mines. Major mines are now running on our conveyor belts,” said Tsuroh, who added that the outlook promised to be bright in light of the regulations limiting imports.
He, however, said even after the price reduction, its products are selling at a 10 percent premium compared to imports.
Capacity utlisation is expected to rise during the second half of the year as the company benefits from the new regulations, said Tsuroh.
According to its annual report, General Beltings posted a $1.8 million loss during the year ended December 31, 2015, from $1.5 million during the same period in the prior year.
Revenues rose to $3.9 million during the period, from $3 million the previous year.
“The increased resonance in promoting the consumption of locally produced goods at national level has strengthened the company’s market positioning in comparison with imports,” said Tsuroh in the report.
Concerted efforts in reviving the mining sector through opening new mines and increasing output in existing ones is expected to result in increased demand of the company’s products from the rubber division.”- The Source
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