Staff Writer
Zimplow says the El Niño-induced drought had a significant impact on its agriculture cluster business units during the half year to June 30, 2024, contributing 80.7% to the group’s loss position.
The diversified equipment maker and distributor recorded a loss before tax of US$1.1 million in the first half of 2024 compared to a profit before tax of US$815,220 in the corresponding period of 2023, attributed to the negative impact of the El Niño-induced drought.
The Victoria Falls Stock Exchange-listed group said low crop output coupled with reduced disposal income on the part of its customers saw a huge reduction in volumes across all business units within the agriculture cluster.
“Given the effects of the drought, the group is forecasting a tough season up to the third quarter of 2024. This pro-longed dire financial situation, pushed the group to embark on a robust cost containment plan to preserve cash flow which included a group-wide staff rationalisation exercise and an organisational restructuring exercise resulting in the unbundling of the clusters approach to enable, the group to be fit for purpose and improve on operational excellence and efficiencies within the separate business units,” Zimplow’s chairperson Benjamin Kumalo said in a statement accompanying financials.
The drought impacted the group’s agricultural flagship businesses – Farmec and Mealie Brand. Farmec turnover was 29% below the prior year. Mealie Brand volumes were down 61% in the local market during the half year period.
The group said Mealie Brand operates in the sector hardest hit by the drought which is the small-scale farmers.
“Yields of less than 300kg per hectare for maize against an average of 3 tonnes, and 380kg per hectare of tobacco against an average of 1,200kg has devastated these farmers’ ability to feed their families, repay their input loans and prepare for the 2024/5 summer season,” Zimplow said.
On the outlook, Kumalo said the 2024/25 agriculture season, which is anticipated to be characterised by above-normal patterns, presents opportunities for the agriculture-focused business units.
