THE cash-strapped Wankie Colliery Company Ltd (Wankie) continues to wallow in its pits after making a shocking $10 billion loss.
>The coal and coke company said this poor showing was $5 billion or 90% more than that achieved during the same period last year.
Times have been hard for Wankie and Zimbabwe’s poor economic fundamentals have not helped the coal producing firm either.
In its unaudited financial results for the six months ended June 30 released yesterday Wankie said the operating loss for the period was $10 646 203 000.
“This was $5 066 493 000 or 90% more than the operating loss of $5 579 710 000 incurred in the first half of 2002,” it said. “This was attributed to the untenable position the company found itself in, whereby, its prices were controlled yet supplier’s prices were not controlled. Furthermore, critical and maintenance spares sourced from local suppliers were priced on the basis of parallel market exchange rates.”
The company said despite operating at 50% capacity, by nature of its business, it incurred fixed costs levels similar to normal captivity.
“In addition inflation pushed up the local input costs,” the company said. “The overall effect eroded the margins and consequent profitability.”
Wankie said the increases in the minimum lending rate adversely affected it, resulting in net finance costs of $198 032 000 against a net finance income of $778 943 000 recorded in the same period last year.
Loss after taxation of $5 570 924 000 was $70 031 000 or 1% more than $5 500 893 000, the loss incurred for the same period previously.
“The past six months continued to experience a decline in economic activity with annual inflation reaching a record level of 366,5% as at June 30 2003,” Wankie said. “Foreign currency shortages, increase in borrowing costs, price controls, transport constraints and the devaluation of the Zimbabwe dollar against major currencies, affected the company’s operations.”
Turnover nose-dived by 30% to $12 323 770 000 for the six months of the year. Last year turnover for the half year was $20 672 246 000.