General Beltings records 36 percent decline

Published: 30 June 2014

CHEAP imports, which pay zero percent duty and a poor performance by General Beltings have combined to put pressure on Zimbabwe Stock Exchange-listed GB Holdings' performance.

Performance in the year to date declined 36 percent. In a trading update for the first half at the Annual General Meeting, Mr Wilbroad Tsuroh said General Beltings is "almost at a standstill" and requires more funding.

He said imports of finished products which land at zero percent duty at a time when the company pays between five and 15 percent duty on raw materials was making it difficult to compete.

Coupled with that is the comparative advantage competitors have as they receive cheaper funding. In China interest are below one percent and around three percent per annum in South Africa.

Interest rates in Zimbabwe range above 20 percent per annum but GB Holdings benefitted from Government's Distressed Industries and Marginalised Areas Fund which offers loans at 10 percent per annum.

"We are 36 percent below last year and that decline is attributable due to General Beltings. We had hoped that general beltings performance would be much more enhanced following a 25 percent protection tariff which was imposed by Government during the last national budget, but unfortunately due to some technical problems that the effect benefits of that tariff protection have not yet trickled in," said Mr Tsuroh

To preserve cash, the group had negotiated an extension of the repayment period by a further two years from next year. GB Holdings has so far paid back about $240 000 of the $1 million loan- excluding interest.

"We were struggling with repayment of the Dimaf loan and Government and the principal sponsor of it Cabs Building Society have agreed to restructure that loan giving us a lifeline and more time to pay," said Mr Tsuroh.

GB Holdings is considering a raft of fund raising measures which include leveraging the properties.
"We will use our properties as security in future for borrowings. We are also looking at creative ways of raising funds even in this difficult environment for instance we have seen an appetite for specialised derivatives and it's something that we are exploring as a board,"
- The Herald