Business / Companies
PGI posts lukeworm interim results
26 Aug 2011 at 12:14hrs | Views
PGI posted a lukewarm set of results for the interim period, showing an attributable loss of $2.9 million. Due to change in year end prior year comparatives are not applicable. The increased activity at Merchandising and improved plant availability at Manica Boards and Doors (MBD) propelled turnover to $18.2 million. Merchandising contributed approximately 57% to group sales, Concrete 18%, Glass 6%, Board Manufacturing 15% and Region 4%.
High operating expenditure saw company record an operating loss of $3.2 million. The biggest loss was recorded in Merchandising $2 million, Board manufacturing loss of $0.5 million, Services loss of $0.5 million and Concrete loss of $0.3 million. Glass and Regional businesses posted marginal profits.
Cash flows remained strained with negative cash generated from operations of $3.9 million. Net gearing deteriorated to 96% from 38% as the company took an additional $3 million short-term facility.
Gross margins were maintained at 26% for Merchandising although the division operated below break even position despite the increased stock availability. Nine Merchandising branches were closed since October 2010. Zimtile (Concrete Division) was impacted by the frequent break down of the Harare plant.
Subsequent to the interim period, PGI concluded the acquisition of the remaining 30% in Zimtile. The group continues to rationalise Merchandising braches with DST and PG Building Supplies set to be merged. Negotiations for the recapitalisation of MBD are still on going. PGI currently owns 61% on MBD. Management has indicated that MDB requires approximately $7 million to retool operations. Post the proposed recapitalisation of MDB, PGI's interest will be significantly diluted as PGI is unlikely to follow their rights and MDB will no longer be consolidated by PGI. This will effectively reduce losses at PGI as MDB is still to turn the corner.
PGI continues to face liquidity constraints despite the capital raising exercise of December 2010 – the current ratio deteriorated to 0.7x from 1.0x. Competition in retailing building and allied products remains keen with SMEs seemingly having an edge.
The group remains undercapitalised with additional funding required for working capital and capex (mainly for Zimtile plant). We believe there is better value elsewhere.
High operating expenditure saw company record an operating loss of $3.2 million. The biggest loss was recorded in Merchandising $2 million, Board manufacturing loss of $0.5 million, Services loss of $0.5 million and Concrete loss of $0.3 million. Glass and Regional businesses posted marginal profits.
Cash flows remained strained with negative cash generated from operations of $3.9 million. Net gearing deteriorated to 96% from 38% as the company took an additional $3 million short-term facility.
Gross margins were maintained at 26% for Merchandising although the division operated below break even position despite the increased stock availability. Nine Merchandising branches were closed since October 2010. Zimtile (Concrete Division) was impacted by the frequent break down of the Harare plant.
Subsequent to the interim period, PGI concluded the acquisition of the remaining 30% in Zimtile. The group continues to rationalise Merchandising braches with DST and PG Building Supplies set to be merged. Negotiations for the recapitalisation of MBD are still on going. PGI currently owns 61% on MBD. Management has indicated that MDB requires approximately $7 million to retool operations. Post the proposed recapitalisation of MDB, PGI's interest will be significantly diluted as PGI is unlikely to follow their rights and MDB will no longer be consolidated by PGI. This will effectively reduce losses at PGI as MDB is still to turn the corner.
PGI continues to face liquidity constraints despite the capital raising exercise of December 2010 – the current ratio deteriorated to 0.7x from 1.0x. Competition in retailing building and allied products remains keen with SMEs seemingly having an edge.
The group remains undercapitalised with additional funding required for working capital and capex (mainly for Zimtile plant). We believe there is better value elsewhere.
Source - Imara
