PG Industries Zimbabwe Ltd recorded a net loss of $2,3 million in the first half of the year largely due to increased finance costs pushed up by a high level of borrowing during the period.
According to unaudited results for the six months to June finance charges soared up to $1,4 million up from $1,1 million recorded in the same period last year after the group’s current liabilities exceeded assets by $8,9 million signalling a liquidity squeeze in the company.
“A high level of borrowings resulted in the group incurring finance charges of $1,3 million,” part of the statement accompanying financial results read.
The loss also resulted from competitive pressure particularly from the group’s merchandising division which led to a decline in gross margins percentages to 27% from 31% recorded in the same period in the previous year.
However, in the period, group revenue grew 11% to $16,9 million on the backdrop of positive performance of one of the group’s divisions, Zimtile.
Zimtile grew sales by 29% to $4,5 million driven by a strong demand of concrete roofing tiles, bricks and pavers.
This followed the successful commissioning of a new tile-making plant last year which resulted in improved capacity to sustain the demand.
PG glass in the same period achieved a 22% increase in sales to $1,5 million on the back of an improvement in stock levels.
The group during the period disposed 18,9% of its 27,9% investment in Manica Boards and Doors (MBD) Ltd and the transaction involved liquidation of an equivalent portion of the loan investment in MBD, while the 9% shareholding is now treated as an investment.
Going forward, the group said it was anticipating subdued business activity for the remainder of the year although supply agreements with both local and foreign suppliers have resulted in improvement in accessing key products for the group to distribute through its branch network.
The group said it has reviewed its structures and this is expected to result in reduction of overheads, while its balance sheet restructuring initiatives are underway. They will be presented to shareholders and if approved will address the negative equity position.
PG said it will continue with plans to dispose excess to requirement properties, which have already been approved by
shareholders while proceeds will be used to reduce bank borrowings.
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