Masimba Holdings engages govt on products movement in the region

Masimba Holdings Limited CEO Canada Malunga told an analyst briefing yesterday that the Group is engaging the government on products movement in the region as the group is facing stiff competition from cheap imports thus affecting the manufacturing operations of the business.
 
"We're engaging government, particularly in terms of the movement of the products within the region. Raw materials, finished products.... We've seen in the last few weeks that there has been movement in certain products (particularly in agriculture).
 
"My take is that it requires a much more holistic approach otherwise we will be a nation of beggars. I know at some stage the people get carried away and say if you are not competitive ship out..." said Malunga.
 
Giving the financial highlights, he indicated that the group recorded a set of flat numbers with revenue going up 2.2% to $44m on the back of a 66% contribution from Construction and 34% contribution from Manufacturing.

Compared to the prior period Construction increased its contribution to group revenue from 63% to 66% whereas manufacturing contribution declined to 34% from 37%. Gross margins on the construction business improved slightly from 15.4% to 16% driven by improved recoveries. Staff costs at 52% of total costs were down from 57% in 2012 as the group rationalised to align group activity with the structure.

Manufacturing division volumes were hardly changed at 4,859 compared to 4,490 tons in the prior period. Capacity utilisation remained low at 50% as aggregate demand was depressed during the period. Competition remains stiff in the manufacturing sector especially from imports which are very price competitive.

Masimba declared a dividend of $0.0012 per share for the period ended 30 June 2013 and it is payable to members registered in the books of the company on Friday 11 October 2013. Shareholders will have an option to elect either cash or scrip dividend.

Operating cash flow was under pressure after reporting a net out flow of $0.8m compared to an inflow of $3.6m in the prior year. Capex was confined to $0.9m compared to 4.2m in the prior year.

Due to the limited profits on the income statement the balance sheet did not grow much with total assets declining by 5% to $36.5m.

Management indicated that the construction book is at record highs of $56m and the company is working hard to realise these projects. However, the current liquidity conditions and the difficulty of raising capital by government is delaying and deferring the off-take of these projects. The company is still working on reducing its overhead expenses with a target of 9% to 10% by the end of FY 2014.

Masimba is in the process of disposing low yielding investment properties portfolio valued at between $5m and $5.5m.

Imara Edwards Stockbrokers analyst Tonderai Maneswa said: "Although issues of capacity remain, Masimba is well positioned to harness the construction boom in the event of one happening.

"To this end management is actively seeking mergers and acquisitions that can enhance synergistic benefits we maintain our accumulate rating given that the company has a dividend policy of 2x cover," concluded Mr Maneswa.