Zimplow reaps rewards of restructuring pain

After three dark years, Zimbabwe’s biggest agricultural implements maker, Zimplow is back in the black, leaner and more efficient after taking the pain of restructuring and cost cuts.

The company, which is also among the largest manufacturers and distributors of farming implements in sub-Saharan Africa region, operates through four divisions, namely, Barzem, Mealie Brand, CT Bolts and Farmec.

All these business units achieved profitability in 2017 as the group recovered from a loss of $2.5 million in the previous year to a net income of $3.4 million for the year ended December, 2017.

The results complete a remarkable turnaround for the agriculture implements manufacturer which changed management in January 2016 after successive poor results under former chief executive Zondi Kumwenda.

Kumwenda was replaced by Mark Hulett.

The company reported a loss after tax of $4.8 million for the year to December 2015 and has been making losses since 2013.

Going back to 2014 the company was severely affected by a marked slowdown in its two key sectors of mining and agriculture.

The agricultural season was a write-off after the El Nino weather phenomenon which, coupled with the unavailability of finance left the company saddled with a huge debt on its balance sheet.

In 2014 the company’s debt stood at $9.4 million before it went down to $7 million in 2015.

In a bid to fight the depressed trading environment, the company focused internally on three areas: gearing, costs and cash management.

The first move, towards an improved financial performance, was to get rid of its debt overhang.

In order to get rid of its debt burden the company offered a rights issue which was concluded in February 2015 for $5 million.

The proceeds from the rights issue were used to retire expensive bank debt which was overdue and placing the business under strain.

The combination of cash raised from the rights issue and collection of debtors helped to repay $ 6.78m of borrowings and materially reduced its total debt to equity ratio from 43 percent to 16 percent for that year.

Additionally, the company undertook a restructuring programme between 2013 and 2015 where it right-sized the business.

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