Masimba wary of El Nino

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MASIMBA Holdings (Masimba) says the adverse impact of the El Nino weather phenomenon and the declining mineral prices could have spillover effects on infrastructure development spending by government and the private sector thereby impacting execution of its order book.

Zimbabwe has just endured a lackluster 2023/24 farming season due to the El Nino-induced drought expected to drag agricultural output while global mineral prices are forecasted to significantly decline this year.

The group managed to secure a firm order book with a net value at US$248 million last year as compared to US$104 million in 2022 as the ongoing public and private sector infrastructure boom offered business opportunities.

However, with emerging budgetary pressures on government and the private sector, the firm is wary of its order book.

“The group has a firm order book valued at US$248 million (2022: US$104 million) with tenures of between three months to three years. However, the execution of this order book may be negatively impacted by the effects of the El Nino weather phenomenon and the declining mineral prices,” said Masimba chairman Gregory Sebborn in a statement accompanying the group’s financials.

“These factors could lead to the government prioritising food relief over infrastructure development and may result in capital expenditure budget cuts in the private sector.” The group has already been affected by slow payments from clients in the last quarter of 2023 despite a relatively stronger start to the year.

During the year ended 31 December, 2023, revenue at US$53,8 million was eight percent above 2022 levels of US$49,8 million driven by a strong and firm order book at the beginning of the year. Earnings before interest, taxes, depreciation and fair value adjustment (EBITDFVA) declined by 11 percent to US$12,6 million from US$14,2 million in 2022.

“The decline in EBITDFVA was attributable to slow down of works in the fourth quarter due to delayed payments and liquidity constraints which negatively impacted project efficiencies. In addition, profitability of the group was impacted by the sub-optimal currency payment mix on most of the projects that were not in line with the increased dollarisation of the economy,” said Sebborn.

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