Financially-troubled Hwange Colliery Company Limited (HCCL) is continuing on a loss-making trajectory, with the latest trading update indicating that the coal miner recorded 64 percent net loss during the first quarter of 2020, ended March 31.
The debt-ridden company, which was placed under administration in terms of the Reconstruction of State-Indebted Companies Act [Chapter 24:27] on 26 October 2018 had its listing on the Zimbabwe Stock Exchange subsequently suspended on 2 November the same year.
In a latest trading update, authorised by the local bourse, HCCL acting company secretary, Rugare Dhobbie, said the trading environment had been challenging adding the loss recorded was however, a 65 percent decrease from what was registered during the same period last year.
“In spite of the challenging operating environment, the company recorded increase in production volumes by 50 percent, a revenue increase of 860 percent, gross profit percent increase of 22 percent and net loss decrease of 65 percent for the 3 months ended 31 March 2020 compared to the corresponding period in 2019,” said Dhobbie.
“The sales volumes however decreased by 33 percent for the same period. The operating environment continued to be challenging and has been characterised by high inflation, fuel shortages and shortage of foreign currency. The company has obsolete and redundant machinery due to insufficient foreign currency as a result of low retention and low export volumes as well as poor interbank forex availability.”
To improve export earnings, Dhobbie said the company was targeting regional markets such as Zambia, DRC, Malawi, Mozambique, Botswana and South Africa, adding they were determined to overcome poor logistics to benefit from those markets.
“Engagements with key logistical partners such as BBR, NRZ and ZRL are on-going to ensure the whole value chain is smoothened and that HCCL coal remains competitive on the export market,” she said.
“The COVID-19 pandemic has slowed down the efforts, as almost all countries imposed restrictions on cross border movements. The impact of these (COVID-19 lockdown) measures on our operations was significant in April 2020. The severity and the operational impact of the restrictions for the remainder of the year cannot be reasonably estimated due to the uncertainty of the impact of the pandemic on regional, global and the domestic market.”
She added: “HCCL however continues to monitor the situation closely and further updates will be provided when visibility improves and we have greater clarity over the expected financial performance of the company in 2020.”