Listed construction firm, Masimba Holdings says despite securing a firm order book, execution of projects will be impacted by the prevailing volatility in the current macro-economic environment.
According to Zimsta, the month-on-month inflation in April 2022 was 15.5 percent gaining 9.2 percentage points on the March 2022 rate of 6.3 percent. The year-on-year inflation rate for the month of April 2022 as measured by the all items Consumer Price Index stood at 96.4 percent defying government targets of restraining monthly inflation within the 5 percent cap and annual inflation between 25 and 30 percent by year-end.
In its First Quarter trading update to March 2022, the group said the worsening inflation threatens the viability and sustainability of long-term infrastructure development projects, given its impact on United States Dollar denominated materials pricing.
“The Group has a firm order book, the execution of which may be negatively impacted by the prevailing volatility in the current macro environment. In addition, the continued conflict in Ukraine has affected supply chains and pricing of key construction materials such as steel, fuel and bituminous products,” the company said.
The operating environment in the first quarter remained volatile as characterized by continued hyperinflation and disparity between the official and alternative market foreign exchange rates and according to analysts, the situation is expected to worsen following measures by government over the past weekend which were heavily criticized by business chamber, Zimbabwe National Chamber of Commerce (ZNCC).
“In addition, the continued conflict in Ukraine has affected supply chains and pricing of key construction materials such as steel, fuel and bituminous products.”
Meanwhile, for the three months to March, the company’s inflation adjusted turnover was ahead of the comparable period by 19 percent, driven by a strong and firm order book which largely benefitted from infrastructure projects being pursued by the government.
Profitability in the period remained stable as supported by a hedged financial position.
The Group was sufficiently liquid with a current ratio of 1:11 compare to last year’s 07:1.
Capital expenditure incurred in the period under review amounted to ZW$ 381,925,360 against ZW$ 43,394,947 last year while borrowings as at 31 March 2022 were at ZW$ 267,878,918 from ZW$ 396,896,573 last year same period.
The decision by the government to suspend banks from lending is expected to worsen problems for most companies who are undertaking massive capital projects for expansion.
