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The reception area at the Zimtile factory in Bulawayo

Senior Business Reporter
PG Industries says its subsidiary, Zimtile, will before the end of the year commission a new concrete brick-making plant at its factory in Bulawayo. A statement accompanying the group’s financial results for the year ended December 31, 2015, which was released yesterday, indicates PG Industries’ proposed investment is envisaged to see the company reclaiming its leading position in the processing and distribution of building materials in the country.

“A new concrete brick-making plant will be commissioned in Bulawayo during the third quarter of 2016.

Successful conclusion of the proposed investment in the company will result in PG regaining its leading position in the processing and distribution of building materials in Zimbabwe,” said the group.

“PG remains a trusted partner in the construction industry and has managed to retain a nationwide distribution network. Zimtile is still a leading manufacturer in concrete roof tiles and concrete bricks.”

In 2011, Zimtile commissioned a state-of-the-art concrete-making plant at its factory in Bulawayo. However, since the adoption of the multi-currency system in February 2009, PG Industries has suffered a significant reduction in sales volumes due to persistent working capital shortages.

Against this background, a number of initiatives have been implemented to improve the performance of the company.

“The initiatives have been underpinned by a scheme of arrangement with the company’s shareholders and various categories of creditors. “The initiatives have resulted in significant reduction in interest bearing debt.

“Operations have been streamlined resulting cost savings being realised,” it said.

The group said demand for its products is relatively strong and sales margins remain healthy but what was lacking is adequate funding to carry out successful building materials for retail operations.

“The auditors… qualified the company’s accounts after the directors’ decision not to consolidate PG Mozambique Limitada’s 2015 results following cessation of operations.

The company was grossly undercapitalised and the directors made a decision to apply for liquidation of PG Mozambique Limitada.

The investment in the books of PG Industries (Zimbabwe) was written off, including balances that the Zimbabwe companies were owed by PG Mozambique Limitada,” said the company, adding that the auditors also made emphasis of a matter in relation to the going concern status of the firm.

The group’s turnover amounting to $18,9 million during the period under review was 19 percent below 2014 figures due to low retail sales volumes.

“Zimtile recorded a seven percent increase in sales. Concrete roof tile sales volumes grew by 11 percent while bricks and pavers sales volumes remained flat.

Overall margins were maintained despite selling price pressures by improving manufacturing inefficiencies at Zimtile and focusing on limited products range with relatively higher margins at the merchandising division,” it said.

Loss before tax and finance costs for the period under review was reduced by 50 percent to $3,4 million despite the reduction in sales.