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Zimplow analyst briefing half year ended 30 June 2011

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Zimplow analyst briefing half year ended 30 June 2011, held on 28 July 2011.

Zimplow analyst briefing half year ended 30 June 2011, held on 28 July 2011.

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  • 1. ZIMPLOW LIMITED Financial resultsfor the half year ended 30 June 2011 1
  • 2. Introduction I t d tiThe team today comprises of:‐ y pZ. Kumwenda (CEO)F. Rwakonda    (CFO)G. Westland (GM Tassburg).The key executives not present are:Mrs. D Mkonto (Comp Sec & CD)M  D Mk  (C  S  & CD)Mr. B Mitchell(MD Fasteners) 2
  • 3. MISSION AND VISIONMISSION“To avail quality affordable and reliable steel products on time every time to the mining, farming, construction and manufacturing sectors”Vision:  “To be a market leader in the Design, Sourcing and Distribution of at least one of our products in 18 countries south of the Sahara by 2020” 3
  • 4. ZIMPLOW VALUES1. Integrity ‐ Being absolutely truthful and  Integrity  accepting responsibility for our actions2. Q Quality – Excellence in everything we do. y y g3. Teamwork – Leverage on each other’s strength4. Dependability  Dependability ‐ Our stakeholders, must be  able to count on us.55. Fun‐ Enjoy every moment. j y y 4
  • 5. GENERAL BACKGROUNDThe group comprises of 3 divisions: Mealie Brand, CT Bolts and Tassburg1. Mealie Brand is the largest of the 3 divisions and is involved in the  supply of animal drawn implements and hoes. The factory is based  in Bulawayo. i  B l2. CT Bolts is a distributor of mild steel bolts and nuts, nails and a  wide range of other fasteners. The division also manufactures  specialised fasteners at its Bulawayo factory. i li d f t   t it  B l  f t3. Tassburg is a supplier of Wood screws, Veranda Bolts and High  tensile bolts. The factory is based in Harare.4. The 3 divisions employ 420 employees. h d l l 5
  • 6. MEALIE‐BRAND OPERATIONS Total Implements sales in units up by 27% from June last year, driven by the local Market. year Market Local implements sales in units up by 81%, at the back of better than expected cotton prices. Exports decreased by 35% from prior year. Drought in East Africa, delayed seasonal take-off and cheap competing products from the far east were major factors affecting exports. Spares were down by 16% while production through the factory is also down by 15% due to a decline in exports and spare sales. 6
  • 7. MEALIE‐BRAND OPERATIONS CONTINUEDSALES AND June % June 2010 June 2009 %PRODUCTION 2011 Change ChangeImplementsLocal(units) 18 183 81% 10 027 7 018 43%Export(units) 5 731 -35% 8 789 7 171 23%Sub-Total 23 914 27% 18 816 14 189 33%Total Spares 138 317 -16% 165 466 100 864 64%Production(kgs) 1 411 072 -15% 1 655 394 1 043 513 59% 7
  • 8. CT BOLTS OPERATIONS Mild St l b lt and nails i K Steel bolts d il in Kgs, up b 85% by Other Fasteners in units up by 49%. Deliberately reduced prices by an effective 6%. AUP(Average unit Price) for Mild Steel fasteners per kg moved from USD3.95 down to USD3.73 per kg to drive volumes and market share. Soon the fastener divisions will be merged. 8
  • 9. CT BOLTS OPERATIONS CONTINUED June 2011 June 2010 % ChangeMild Steel Bolts (Kgs) ild l l ( ) 58 75 5 975 31 015 5 90%Nails (Kgs) 14 074 8 521 65%Total (Kgs) 73 049 39 536 85%Mild Steel (Units) 2 321 428 1 225 701 89%HT Bolts 1 571 142 479 291 228%Screws 8 869 334 6 637 419 34%Miscellaneous 579 755 426 324 36%Factory S kF Stock 220 669 324 315 -32% 32%Total (Units) 13 562 328 9 093 050 49% 9
  • 10. TASSBURG OPERATIONS Sales volumes up 38% from prior year  to 51 tonnes l l %f Production was affected by delays in Steel deliveries from  RSA due to a breakdown  at  Mittal Steel in RSA. RSA due to a breakdown  at  Mittal Steel in RSA Capacity utilisation has averaged 20% . The division is  regaining market share from imports. g g p Employee numbers are 30 compared to 29 last year. 10
  • 11. TASSBURG OPERATIONS CONTINUED June 2011 June 2010 % ChangeRivets(kgs) 1 043 965 8%Screws(kgs) 41 659 29 828 40%Verandah Bolts(kgs) 8 664 6 362 36%Total KGs 51 366 37 155 38% 11
  • 12. MAJOR COST MOVERSSteel prices increased by an average of 20%. Heavy snowstorm in the US and Europe caused shortages of scrap scrap,Floods in October‐November impacted the coal pricesleading to a spike in the steel prices. g p pWe expect the steel prices to settle as and when the coal oriron ore prices correct themselves.Employment costs d iE l driven mainly b a 5% i i l by % increase f the for hfirst quarter but unions are pushing for a further 15%. RSA strikes causing more uncertainty.Fuel prices up 17% from January 2011 and so are haulagecosts. 12
  • 13. ZIMPLOW LIMITEDFINANCIAL RESULTS 13
  • 14. STATEMENT OF COMPREHENSIVE INCOME 30 June 2011 30 June 2010 ChangeRevenue 49 95 4 4 969 514 3 477 9 3 477 902 43 43%Domestic 4 139 539 2 628 998 57%Export 829 975 848 904 ‐2%PBIT 677 095 369 216 83%Net Interest income 141 890 54 233 162%PBT 818 985 8 8  8 423 449   93%%Taxation (191 091) (110 985) 72%Attributable Income 627 984 312 464 101% 14
  • 15. 3 JSTATEMENT OF FINANCIAL  POSITION  AS AT 30 JUNE 2011 30 JUNE 2011 31 DECEMBER 2010 NON CURRENT ASSETS 2 815 362 2 845 090 CURRENT ASSETS 10 525 498 10 648 562 TOTAL ASSETS 13 340 860 13 493 652 SHAREHOLDERS’ 11 286 811 11 342 051 FUNDS NON CURRENT LIABILITIES 600 550 599 833 CURRENT LIABILITIES 1 453 499 1 551 768 TOTAL EQUITY AND LIABILITIES 13 340 860 13 493 652 15
  • 16. STATEMENT OF CASH FLOWS 30 JUNE 2011 30 JUNE 2010 OPERATING INCOME BEFORE 823 246 487 946 WORKING CAPITAL CHANGES WORKING CAPITAL MOVEMENT (887 813) (617 424) NET CASH FLOW FROM OPERATING (406 867) (358 159) ACTIVITIES FINANCING AND INVESTING (798 900) (110 914) ACTIVITIES NET CASH FLOWS 1 827 821 662 290 16
  • 17. Looking Ahead Looking AheadBusiness environment Export demand expected to improve. July exports are  already up by 56% over last year. Increased production to meet higher demand  Negative impact of high wage demandsEarnings We expect growth which will be ahead of our initial   forecast of 10%.f t  f  % 17
  • 18. ZIMPLOW LIMITED THANK YOU AND GOD BLESS Zimplow Limited 39 Steelworks Rd Steeldale Bulawayo Zimbabwe www.zimplow.co.zw i l 18
  • 19. QUESTIONS? 19