GB Holdings’ profits up despite volumes slump

Fradreck Gorwe Business Reporter
Zimbabwe Stock Exchange (ZSE) listed rubber and chemicals manufacturer, General Beltings, posted 264 percent growth in gross profit to $2,5 million for the half-year to June 30, 2019, from $0,58 million in the prior year comparative.

The stellar performance was despite a fall in volumes by both the ZSE listed entity’s rubber and chemical divisions.

Total volumes shrank by 30 percent to 347 tonnes “due to inactivity in the first quarter at the rubber division as the business remodelled in response to key policy changes.

“Volumes at the chemical division at 241 metric tonnes were 16 percent down on prior year, reportedly “attributable to deflated downstream demand in the economy.”

The profit growth despite volumes-slump was attributable to growth in revenue, attributable to favourable product mix and pricemovements.

“Despite a reduction in volumes, total turnover increased by 100 percent when compared with prior year same period due to a favourable product mix and the price movement dynamics prevailing in the macro economy.

“Both divisions recorded growths in turnover in their niche markets, where opportunities existed. Due to improved turnover and a cost lag, overall gross profit increased by 264 percent,” said Group chairman Godfrey Nhemachena in a statement accompanying the results.

Revenue at $5 million was up 100 percent from $2,5 million in the same period last year.

The group also recuperated from an operating loss of $86 000 to post a profit of $1,5 million in the period under review.

Profit after tax increased to $740 039 compared to $138 686 achieved in prior year comparative.

Future performance is hinged on improvements in the macro-economic environment, particularly growth in the mining sector, which is a key market for the company’s products.

Further, the company is braced to maneuver through headwinds to still post positive results in the future.

“The economy is expected to shrink by 2,1 percent in 2019 owing to the effects of drought on key sectors particularly agriculture and power generation.

“The mining sector, which is a key market for the company is expected to register a 1,1 percent growth on the back of strengthening commodity prices.

“Despite policy fluidity and a rising inflation rate, the company is expected to withstand the headwinds to preserve value while taking advantage of any opportunities that may arise in the key markets it serves,” said Mr Nhemachena.

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