GB seeks additional working capital

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GENERAL Beltings Holdings (GB) says it deferred paying out a dividend for the half-year to June 30, 2022, opting to consolidate funds to oil its capitalisation plans as the firm urgently needs working capital.
This comes as the firm took a heavy battering from the Covid-19 pandemic in the prior period, which affected demand for its products in key markets. At the same time, parallel exchange rate instability fuelled a rise in operating costs.

In a statement accompanying half-year results that ended June 30, 2022 group chairman Godfrey Nhemachema said the board had agreed on scrapping the dividend.

“At their meeting on 22 September 2022, the board considered the need for additional working capital to fund a firming order book and the need to adequately stock raw materials. To that end the board resolved not to pay an interim dividend for the period under review,” he said.

For the period under review, GB’s total volumes increased by 21 percent to 500 metric tonnes when compared with the same period prior year’s 412 metric tonnes buoyed by a 42 percent volume increase at Cernol Chemicals Division.

“Cernol Chemicals shored up the volumes as the economy opened up post-Covid-19 restrictive measures and benefited from its consolidation in the niche markets. General Beltings’ volumes decline was attributable to shortages of raw materials even though the order book was firm.

“GB’s total turnover increased by 12 percent to $669 million compared with the corresponding period turnover of $597 million,” Nhemachena added.
According to Nhemachena, turnover growth was a result of volume growth at Cernol Chemicals.

General Beltings consolidated its market positioning in the traditional markets as customers substituted imports with locally produced products.
“Total gross profit at $278 million increased by five percent when compared with the same period prior year’s $265 million due to improved throughput and cost containment measures.

“However due to the USD imported inflation in the rapidly dollarising environment, operating costs at $260 million increased by 58 percent when compared with the prior year period’s $164 million. As a result, an operating profit of $24 million was recorded against $104 million in the prior year’s same period,” Nhemachena further said.
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