LISTED construction company Masimba Holdings has projected a cautious outlook for its operaions in this year on account of persistent foreign currency constraints that are hampering most business operations across industries in Zimbabwe. Foreign currency shortages remain the biggest headwind in the current year despite indications orders are likely to outperform 2017, Masimba chief executive Canada Malunga told analysts at the company’s annual results briefing last Thursday.
The forex problems are threatening execution and delaying completion of construction projects, Mr Malunga said.
“In terms of headwinds; the number one challenge is forex. If there is anything that is frustrating to us and our clients and employees is the issue of foreign currency. Foreign currency is really a big problem. All along we had been able to cope but the pressure that we felt in the last quarter of 2017 and this quarter is threatening the viability and execution of some of our projects,” Mr Malunga said.
“Where we are talking about construction periods of four months, five months, six months, twelve months and so forth at times it becomes very difficult to complete superstructures when you start talking about foreign currency,” he said.
Mr Malunga said plant breakdowns now take three to four weeks to turnaround due to foreign currency shortages.
As a result, the company has now been forced to increase stocks of spares instead of deploying the working capital in usual manner.
The company reported an after tax profit of $698 738, in the period to December 2017, up from $507 055 after registering a 43 percent turnover growth to $27,5 million, largely driven by the private sector particularly mining and housing infrastructure.
Earnings per share went up 35 percent on prior year to 0,31 cents.
Overheads stood at $1,8 million up from $1,6 million last year.
Included in staff costs is an amount of $217 000, which relates to taxation legacy issues that were resolved in the current year.
Other costs increased by 20 percent driven mainly by business growth and inflationary pressures in the last quarter.
Mr Malunga said the company was looking at spending $3 million in 2018 to support the current order book. The order book, which is confirmed and active, is valued at about $40 million.
In the last year the company embarked on major mining project where it did civil works. Masimba also started constructing the Old Mutual SMEs centre CBD building along Robert Mugabe, which is almost complete and will be commissioned on May 31, 2018.
Masimba is building a shopping mall in Norton, which was started at end of 2017.
The construction works are progressing on the site.
In Victoria Falls, Masimba started a 12-month project to construct a shopping mall with access roads and the structure.
The team is currently preparing for the foundations and platforms for the mall.
A road construction project on Kariba’s mountains is also underway as well as a water reservoir.
In terms of capacity utilisation, based on current overheads, the group is sitting at upwards of 85 percent, Mr Malunga added.