General Belting records solid performance

20 May, 2022 - 00:05 0 Views
General Belting records solid performance

eBusiness Weekly

Enacy Mapakame

General Beltings Holdings Limited recorded a solid performance for the first quarter to March 31, 2022 despite a challenging business environment, on the back of carried forward stocks and orders from prior year.

At 307 tonnes, volumes for the period were 48 percent above same period prior year’s volumes 207 tonnes.

Both operating divisions recorded growth in revenue and volumes compared with the same period prior year.

In view of the limited pricing options and limited raw materials supplies, turnover on an inflation adjusted basis grew 23 percent to $210 million from the $170 million recorded same period prior year.

On a historical basis turnover at $196 million grew by 104 percent from prior year’s $96 million.
Gross margins and operating expenses were under severe pressure due to parallel rate indexing of local costs. As a result, operating profit lagged behind budget.

In a trading update for the quarter under review, company secretary Patrick Munyanyi bemoaned the operating environment characterized foreign currency shortages and inflationary pressures having a knock on effect on businesses.

The spectrum of policy measures intended to arrest the volatile exchange rates have threatened the going concern status of businesses as the abrupt suspension of facilities would dislocate cash flow plans and further delay the movement of raw materials from further afield.

This has also been compounded by global shocks posing challenges to local businesses due to among others supply chain disruptions caused by the conflict in Ukraine.

“The raft of monetary policy measures aimed at arresting the exchange rate volatility have presented a profound challenge to business operations.

“The impact of abrupt policy directives incapacitates firm’s ability to effectively deploy working capital and erode market confidence. It is hoped that as measures take effect a more enduring and lasting solution will enable firms to gain traction in the later half of the year.

“The absence of a cessation in the Russia – Ukraine crisis, logistical delays will continue to disrupt the flow of materials into the sub-region.

“Therefore, local firms will be compelled to procure locally in order to avoid long lead times and working capital cycles,” he said.

Munyanyi added the conflict in Ukraine had emerged as a global flash point which has spawned among others global logistical constraints which have resulted in delayed delivery of raw materials.

He said: “Inevitably the conflict has negatively impacted economies through pass-on increases on raw materials, energy, mining and agriculture input costs.”

In light of this, Munyanyi said GB Holdings would focus on value preservation through continued profitability in the traditional markets which are expected to be buoyed by improved mineral commodity prices and increased local demand as firms opt to procure locally.

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