HARARE, May 29 (The Source) – Engineering and construction group Masimba Holdings says turnover for the first four months of the year had dropped by 17 percent compared with the same period last year, but expects its plastics and fabrication unit, Proplastics, to drive earnings growth in the full year.
Masimba is the former Zimbabwean unit of international construction giant Murray & Roberts.
Group chief executive Canada Malunga said Masimba’s construction unit is suffering from poor liquidity in the economy and its turnover for the four months declined by 37 percent on the prior period.
“While Masimba has a firm order book, a significant part of the order either could not take off or suffered significant delays due to customer liquidity constraints,” Malunga said in a trading update ahead of the company’s annual general meeting on Friday.
Proplastics volumes grew by seven percent on last year, capitalising on residential housing and agriculture infrastructure development, while the top line grew by 10 percent due to improved product mix.
Malunga said while the group was sound financially, short-term cashflows were under pressure due to declining turnover and delayed customer payments.
Government had lowered its debt by $1,5 million — from $4 million — during the period, enabling the group to reduce its external borrowings to $1,3 million and its debt to equity ratio to five percent.
Of the debt, $736,000 is attributable to Proplastics and the balance to Masimba Construction.
Proplastics’ growth will be driven by rising demand for residential housing and agriculture infrastructure.
The unit will commission equipment for plastic plumbing products next month, Malunga said.
“These machines have been paid for. Significant mergers and acquisition opportunities exist for this business that will truly convert Proplastics into a truly world class regional business,” he said.
Masimba will also pursue opportunities in residential housing, education, commercial and retail buildings and telecommunications and it is therefore anticipated that performance will improve in the second half.
The company’s Monavale medium income housing will kick off this June following the recent EMA approvals, opening up additional revenue streams.
Malunga also said the group had put in place joint venture structures with local and regional contracting partners to boost capacity, particularly in energy, water, mining and roads infrastructure projects.