Companies slowly recovering from Covid-19 effects

Companies, a number of them listed, are slowly recovering from the effects of the Covid-19-induced lockdown following the easing of measures, recent trade updates have shown.

When President Emmerson Mnangagwa placed Zimbabwe under the initial 21-day national lockdown which came into effect on March 30, business almost came to a standstill.

Many companies were forced to close shop while those categorised under the essential services had their hours of operation cut short resulting in loss of potential revenue.

The government has however relaxed some measures, opened up the economy and further increased hours of operation for corporates.

Cassava Smartech secretary Charmaine Rose Daniels in a trading update for six months ended August 31, 2020, said despite Covid-19, they recorded revenue growth.

“Despite the reduced contribution of Ecocash to the group’s performance, the group’s revenue diversification strategy has seen some resilience spurred by the exponential revenue growth in the upcoming Insurtech and the Vaya Technologies businesses,” said Daniels.

Proplastics also had a positive story to tell.

“It is, however, pleasing to advise that we have witnessed positive increase in economic activity in the third quarter of the period as businesses adapt to the “new normal,” said Proplastics chairman, Gregory Sebborn, in the company’s trading update for the third quarter ended September 30.

“The global impact of the Coronavirus (Covid-19) has significantly affected the group’s domestic and regional markets resulting in significant interruptions in the entire supply and value chains. The trading environment for the three months has been challenging. The period was characterised by tight liquidity conditions, hyperinflationary environment, volatile exchange market and domestic price distortions resulting in relentless pressure on the local costs of production.”

Sebborn said the group’s products performed well during the period under review.

“The demand for the group’s products improved significantly in the quarter under review,” he said.

“As a result, sales tonnage for the quarter grew by 64% compared to the third quarter of the previous year. In turn, year to date volumes responded positively from a reduction of 18% in the first half of the year to 10% above a similar period last year at the close of the third quarter.”

He said foreign creditors closed the quarter at US$400 thousand compared to US$1 million at the end of 2019.

“It is pleasing to note that the business is now within the trading terms as arranged with its foreign suppliers,” he said.

“The solid third quarter performance should set the tone for the remainder of the year. Though supply gaps as a result of the global shortage of raw materials are to be expected beyond year end, management has put in place robust contingency plans to reduce these to the bare minimum. The easing of lockdown regulations, a stance also being observed in the region, is anticipated to spur demand further.”

Sebborn added that their operations were fully back on track with priority remaining the safety and health of all their key stakeholders and employees because of the Covid-19 pandemic.

In a statement accompanying financial results for the year ended June 30 2020, National Foods chairman, Todd Moyo, said while there were year-on-year volume declines across all categories, the quarterly volume trend during the year was largely stable, except for seasonal variations in the maize division.

“Revenue however increased by 52% to ZWL$12.79 billion, reflective of higher selling prices following the progressive removal of most grain subsidies,” explained Moyo.

“Gross margin dollars increased by 48%, below the increase in revenue as the group focused on competitively pricing its products. Operational expenditure increased by 45% compared to last year, with the optimisation of the group’s cost structures remaining a key priority. As a result of the above, Profit after Tax increased by 45% to ZWL$ 1.38 billion.

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