Zimplow will take delivery of Massey Ferguson tractors from Brazil under a $5 million asset-based facility
Golden Sibanda Senior Business Reporter
Zimplow Limited has signed two asset- based finance facilities worth $10 million aimed at improving volumes at the company’s tractors division.
The first $5 million facility is from BNDES Brazil. It is a five-year revolving facility, which will offer Farmec tractor customers extended credit of up to two years at gross discounted prices of around 8pc interest per year.
Zimplow chief executive Mr Zondi Kumwenda said the deal was now signed and will operate through a backward agreement with AGCO Corporation of Brazil.
The Zimplow CEO said first batch of 27 tractors is expected around mid-September while the second batch will be in the country early next year.
Mr Kumwenda said the Brazilian facility was backed by the country’s Export and Import Bank, which will make the payments to the Brazilian supplier.
“It is a supplier credit line backed by a Brazilian Export and Import Bank. This facility will enable us to bring tractors while the bank pays the supplier. Customers will enjoy extended credit period at low interest,” he said.
The other facility for the same amount ($5 million) has been signed with a local financial institution and a leading tobacco merchant.
The facility is for three years renewable to be extended on similar terms cost as the Brazil one.
Giving a financial update for the half year period finance director Mr Francis Rwakonda said revenues had declined to $13 million from $20 million in the interim to June 2014 against the comparable period last year.
Consequently, the decline condemned the group to a $1,7 million loss compared to a profit of $2 million last year driven by profit disposal of a unit.
The group was weighed down by its main business — mining and infrastructure — which saw volumes in earthmoving tumbling 58 percent, lift trucks down by 78 percent while gen-sets plunged by 60 percent.
This was due to delays in targeted projects, decline in traditionally exported labour and low business in mining construction and infrastructure.
Mr Kumwenda said the group’s agricultural business had recovered and a better out-turn was most likely to be achieved in the second half of the year. He said that volumes in August had shown encouraging results. The fastener business is expected to post a loss, however, lower than the first half.
The mining and infrastructure business, which weighed down the business in the half year, is expected to recover to break-even point in the last half.
Total assets were down by 1,5 percent to $222 850 spent on capital expenditure. Total assets for the period declined from $50 million to $49 million.