Masimba projects economic recovery for Zimbabwe
MASIMBA Holdings Limited, the listed construction firms, says it sees the country’s economic decline bottoming out in the near future.
The group is positioning itself for opportunities to be driven by an anticipated boom in public infrastructure, it said.
Masimba’s remarks were made in an announcement of financial results for the half year ended June 30, 2015, which showed a decline in revenues by 30 percent to US$9,5 million during the period, compared to US$13,6 million at the same time in 2014, after the downturn affecting the country intensified, undermining the market’s capacity to roll out new projects.
Loss before tax increased to US$457 000 from US$436 000 at the same time last year.
“While the operating environment is expected to remain depressed in the short to medium term, the board is optimistic that a turn in the economy is imminent,” said chairman, Greg Sebborn.
Sebborn’s optimism of a turnaround may be confounding, considering the myriad challenges undermining recovery, among them a deepening power crisis, lack of long term capital and high interest rates.
“The board believes that Masimba will be able to exploit the anticipated infrastructure development opportunities particularly in housing, mining, road and transport, communications and water,” Sebborn said.
The challenge for construction firms in Zimbabwe is that they get the majority of their projects from government, which has to deal with an infrastructure funding gap close to US$30 billion, according to the African Development Bank.
But while there has been talk about revisiting these projects, there are no time frames of when and how construction would resume.
But Masimba has been pursuing private projects.
Masimba’s chief executive officer, Canada Malunga, said the group, which reported for the first time after unbundling Proplastics in June, would turn to profit in the first half of 2016.
“We see turnover improving in 2016 and the loss position currently decelerating on a month-on-month basis will return to profitability in (the first half of 2016),” Malunga said.
The firm said gross profit percentage improved to 21 percent during the review period, from 17 percent during the prior comparative period in 2014, but earnings before interest, tax depreciation and amortisation declined to US$$535 963, from US$759 638 last year.
Overheads dropped by nine percent to US$2,3 million, from US$2,6 million at the same time last year.
Masimba generated positive cash flows from operations of US$725 127.
At the same period last year, the firm has generated US$668 808.