BY FIDELITY MHLANGA
Notwithstanding the economic headwinds experienced during 2020, mostly as a result of the Covid-19 crisis, Masimba Holdings Limited, one of Zimbabwe’s biggest construction firms, saw its profits rose. The firm says it has enjoyed a fair share of good business from both the public and private sectors. Our business reporter Fidelity Mhlanga (FM) last week spoke to Canada Malunga (CM), the chief executive officer of the listed giant, to understand how the business has remained strong. Below are excerpts from the discussion…
FM: At a time when
Covid-19 reared its ugly head last year, Masimba Holdings’ profit after tax increased by 113% to $327,38 million. What factors underpinned this performance?
CM: Profitability in the financial period was steered by a strong order book and improved operational efficiencies across the contracting projects. The future performance of the company will be driven by the mining, housing, and road infrastructure projects. The government has committed substantial resources towards the transport, education, water and mining infrastructure. In addition, an environment that promotes PPPs in infrastructure has been put in place. We are of the view that the bullish commodity prices prevailing on the international market will be sustainable for the foreseeable future.Â Furthermore, this will likely spur our key resource markets to continued investment in infrastructure. Notwithstanding everything we are seeing, we also take note that there are so many people on the housing waiting list.Â The government is making concerted efforts to remedy this.Â The company remains ready to play its part in this market. The year 2020 was an exceptional year for the agriculture sector following the excellent rains received in the 2020-21 season. We believe that the farmers are likely to generate value from their bumper harvest, which they will invest back into farming. The future of Zimbabwe, as an agro-economy, looks bright and this is positive for our industry.
FM: How strong is your order book for this year?
CM: The company’s order book is strong and spread across key markets comprising roads, mining, education and housing infrastructure. The order book is evenly balanced between the public and private sectors. We are executing mining, housing and road infrastructure projects which include a section on the Harare-Masvingo highway.Â The company, which is one of the five contractors working on the Harare to Beitbridge highway, has to date opened 30,2km of the Harare-Masvingo highway stretch to traffic. The balance of 9,8km is on course and anticipated to be concluded by end of June 2021. We are also working on the
Odzi-Marange-Zvipiripiri road in Manicaland. Ten kilometres have been opened to traffic while 7,4km will be concluded by end of June 2021. There are two projects in the housing infrastructure that we are involved in which we believe will transform the livelihoods of Southview residents in Harare and Longlands residents in Marondera. The company will be starting on a new housing infrastructure in Bulawayo in the second quarter of 2021.
FM: Tell us how much you have expended towards capital equipment in the past year.
CM: An amount equivalent to US$3,6 million was expended on capital expenditure in the financial period. The amount was largely spent on excavation and material handling equipment.
FM: To what extent has Covid-19 affected company operations and earnings?
CM: The impact of Covid-19 on the group’s earnings was minimal. We attribute this minimal impact to the company’s robust Safety, Health, Environment & Quality (SHEQ) management systems which are also complemented by our clients and suppliers. We have always emphasised on the safety and health of our people and the environment.Â Accordingly, when the pandemic broke out, it was easier for us to transition into the rigid protocols of Covid-19 because we are used to operating under very strict SHEQ environments. However, the supply chain was disrupted during the lockdown and transportation of people and materials was affected. Notwithstanding our strong systems, the company lost 3 087 man hours resultant from meeting the prescribed isolation requirements. In addition, the company spent $2,4 million to strengthen the Covid-19 mitigation measures.
FM: What is your comment about the state of the construction industry and its future prospects in Zimbabwe?
CM: We are optimistic on the opportunities surrounding mining, housing, roads and agriculture infrastructure.
FM: Are you accessing adequate forex from the auction system?
CM: The Dutch forex auction system has contributed towards the stabilisation of exchange rates and the improvement of foreign currency in the country.Â The company has thus far been able to access foreign currency for the importation of key equipment and construction materials. Resultantly, inflation is decelerating, and this promotes construction activities.
We are, however, concerned with the pricing distortions of locally produced products which have become uncompetitive against regional peers.