HARARE – PG Industries Zimbabwe Limited (PG) has recorded a $2,5 million loss for the six month period to June, compared to $2,7 million recorded in the prior year casting the company’s future in doubt.
The listed industrial firm has been recording consecutive annual losses since dollarisation despite disposing of non-core assets in order to reduce the group’s short-term debts.
Francis Dzanya, the PG acting chairperson, said the group’s current liabilities exceed current assets by $8,9 million.
“The group continued to face working capital constraints. These conditions give material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern and therefore may not be able to realise its assets and discharge its liabilities in the ordinary course of business,” he said.
Revenue for the period had increased by 11 percent to $16,9 million with management saying this was achieved on the backdrop of softening demand and light liquidity conditions.
Competitive pressure, particularly at the merchandising division, resulted in the overall group gross margin percentage declining from 31 percent to 27 percent.
In the period under review PG’s merchandising unit sales grew by a modest four percent to $10 966 177, while Zimtile sales grew by 29 percent to $4,6 million, driven by strong demand for concrete roofing tiles, bricks and pavers.
“Following the successful commissioning of a new tile making plant at Zimtile beginning of 2012, production capacity and efficiencies have improved,” he said.
PG Glass achieved a 22 percent increase in sales to $1,5 million on the back of improvement in stocking levels.
The embattled firm has approved a review of the group’s structures which will result in a significant reduction of overheads going forward as a way of improving operational performance, reducing the heavy interest burden and strengthen the balance sheet.
“The board has also approved a review of the business models, especially those relating to merchandising, which should improve profitability,” said Dzanya.