Masimba boosts export capacities

Published: 26 March 2014

Listed construction firm Masimba Holdings Ltd is strengthening its presence in the region and aiming to double its exports this year.

Masimba chief executive officer Canada Malunga told analysts this afternoon that they are targeting exports in the region of 10 percent. "We achieved 5 percent, which is certainly not satisfactory.

Our target was 10 percent, but that 5 percent was coming from zero in the comparative period.

"We have reestablished ourselves in the regional market particularly in Mozambique and Zambia and we are hopeful of achieving 10 percent in 2014," he said.

In the 18-months period to December 31, 2013, the group posted revenue amounting to $62,3 million, which was a 45 percent improvement from the $43 million achieved in the 12-months period ended June 30, 2012.

Management said the performance was commendable in view of the challenges the company faced during the period.

Group finance director Michael Tapera highlighted that the group underwent "significant restructuring efforts" that resulted in an erosion of benefits.

"The realignment of group activities during the period resulted in a once-off charge to earnings of $1,2 million.

There was an additional charge of $357 000, which represents a fair value adjustment to property values as a consequence of a general slump in the property sector," he said.

Tapera also said the size of tenders that the company was receiving during the period under review were "not at the scale that we would like".

Masimba, however, managed to achieve higher gross profit margins of 17 percent in the period under review compared to the prior reporting period of 15 percent. This was driven by a major drive for efficiences that was undertaken during the period.

Additionally, properties with a value of $645 000 were disposed of and proceeds applied to the reduction of group borrowings.

An EBITDA of $3,9 million was recorded for the full 18-months compared to $3,5 for the previous 12 months.

The group also managed to show a net positive cash flow of $489 348 during the period under review. The group said its manufacturing division, Proplastics, continues to "enjoy moderate levels of demand despite broad cashflow issues.

The company expects to commission a new HDPE plant by June this year.

Malunga said as at the close of the last period, Masimba Construction had a direct exposure to Government and quasi-government of $5,7 million and "efforts to recover the amount was ongoing".

He, however, maintained that this would not affect the company taking business from that source.

Management expects a significant shift in the order book this year, with telecommunications accounting for the majority of business, followed by education and mining.

During the period just ended, the company's order book was dominated by mining and roads and transport infrastructure.

Masimba, however, still sees significant opportunities coming from the mining sector.
- bh24

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