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Unifreight Sees HY Profit Slump As Finance Costs Strain

ZSE-Listed cargo transporting company, Unifreight Africa Limited says its profit margins for the six months to June 2023 were widely affected by finance costs driven by revaluation of foreign denominated loans obtained to finance new vehicles amounting to ZW$ 44 billion.

The Group recorded a net profit before tax of ZW$6 billion which is 30 percent below prior year due to increase in finance costs.

However, overall volumes went up 38% year on year with significant contributions having come from tobacco transporting over 40,000 tons/annum which is 91% up from last year.

In its half year (HY) financial update, the group said with the new fleet it was able to dedicate vehicles to blue chip customers such as Delta, Triangle, Unilever, Nestle, Cairns who all require nationwide distribution.

Group Revenues of ZW$ 55 billion were 115 percent above prior year’s ZW$ 22 billion.

“The Group continues to monitor costs under the current volatile environment. Tonnage grew by 50% from the previous year (though 18% below budget), largely driven by tobacco volumes and increased FTL volumes from new vehicle assets,” said Unifreight.

The Zimbabwe Dollar continued to depreciate during HY23 which, combined with the bank policy lending rate at 80%, has resulted in the banking sector loan to deposit ratio remaining low thus restricting business’s ability to borrow and finance short term liquidity issues.

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“The result of this is the retractive cash flow environment where many businesses stretch credit terms instead of utilizing overdraft facilities.”

The balance sheet grew from ZW$ 66 billion to ZW$ 269 billion due to a combination of recapitalisation of its fleet and revaluation of assets.

Given the Group’s focus on improving working capital cycles as well as the need to reduce exposures to borrowings and foreign liabilities, the board has decided not to declare an interim dividend.

“The Group remains optimistic about the future and looks forward to being able to utilize our increased capacities during the traditional festive period ramp up in retail spend between October and December.”

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