Construction firms cash in on Zimbabwe's growing infrastructural spending

AS construction spending by government, mines and individual home builders grows, the tills are ringing at some of Zimbabwe's listed companies.

Between January and June, government spent $21,2 billion on capital projects, according to Treasury data. Of this, $1,4 billion went into one of government's roads rehabilitation projects, the emergency road rehabilitation programme. There was additional spending on the Beitbridge-Harare Highway.

Apart from government and mining companies, Zimbabweans building their houses are increasing the demand for construction materials, from cement to bricks and other materials. House construction is mainly driven by diaspora money, increased bank lending and the informal market, according to industry executives. Construction companies are lapping it all up, as their results show. The infrastructural spending is keeping the wheels turning at seven listed construction firms?

PPC Zimbabwe

The cement company says in the six months to September, its cement sales volumes were expected to grow by between 14%-18%. Where is the demand from? It's coming from retail sales — that is individual buyers — as well as demand from companies that make concrete products, as well as government contracts. When compared to the same time in 2019, before COVID-19, PPC Zimbabwe sales volumes are up by 25%-29%.

The projects that PPC Zimbabwe is supplying include; the Hwange power station expansion, the recently completed Muchekeranwa Dam, Gwayi-Shangani Dam, the new Manyame Air Base Hospital, National University of Science and Technology student accommodation, RG Mugabe International Airport, the Beitbridge-Harare Highway and the Beitbridge Border Post expansion.

Masimba

Revenue at Masimba for the six months to June grew 58%, mainly driven by a firm order book in mining, infrastructure and roads. It is one of the five companies on the Beitbridge highway project.

According to the company, the revenue earned in US dollars, as a proportion to total revenue, improved to 35% from 20%.

This is because the company has built up a "diversified project portfolio", that evenly balances both government contracts and private clients.

Barzem

Barzem, a division of Zimplow, is the local agent of CAT earthmoving equipment. In the half year to June, the company doubled the number of earthmoving units sold.

"Our outlook is positive supported by a firm order book and good leads in the construction and mining industries." Barzem achieved a profitability growth of 88% in real terms.

It has sold CAT units to CMED and DDF, the government agencies leading some road projects, as well as to PPC Zimbabwe and Masimba. Barzem will have some strong competition soon, when John Deere's construction equipment unit opens in Zimbabwe.