- Category: Stories
- Published on Monday, 03 January 2011 19:18
- Written by Charles Rukuni
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Trans Zambezi Industries (TZI) listed on the Zimbabwe Stock Exchange in February and on the Lusaka Stock Exchange in April has produced remarkable results with turnover more than doubling from US$48.7 million to US$99.5 million, profit attributable to shareholders increasing 61 percent from US$10.6 million to US$17 million and headline earnings up 21 percent from 6.5 US cents to 7.9 US cents.
TZI which took over troubled Art Corporation and Chloride Zimbabwe when the two seemed destined for collapse has turned around the two to become the engine-drivers of the group which has three core divisions: industrial, food and distribution, and financial services.
The industrial division comprises: Art Corporation, Fleximail and Chloride. The food and distribution division, concentrated in Zambia, comprises the Zambezi Ranching and Cropping, Zambeef and in Zimbabwe, Metro Megacentre which is in its second year of operation and has been rebranded to Makro. It now has a Bulawayo branch opened in October.
The financial services division comprises Bard, IGI Insurance, Madison Insurance in Zambia and Houses for Africa which is said to have provided more than 4 000 houses in Kuwadzana 4.
Art Corporation which made a loss of $224.5 million in 1996 turned around to make a profit of $106.3 million before taxation. This was a remarkable performance for a group which had made losses of over $390 million in the previous five years.
According to the company, the principal contributors to profit were the paper mills. Mutare Board and Paper Mills exceeded expectations and the directors have approved an $8 million capital investment to increase capacity by 15 percent next month.
The fine paper and tissue machines at Kadoma operated more efficiently "than in their history and for the first time a profit was made from fine paper", the company says. Quality improvements and additional capacity are planned for next year.
Chloride, another company that was facing problems mainly because of cheaper batteries from South Africa contributed $17 million to the profit before taxation.
Zimbabwe Express Airlines, in which TZI also has a 49 percent stake, consolidated its position as the principal privately-owned commercial airline with improved load factors, the group says. Fresh equity is therefore being sought to fund growth.
TZI says with emerging economies around the world experiencing a difficult and turbulent few months, the group's principal areas of activity have been no exception. Organic growth in earnings is projected in the majority of TZIs businesses but aggregate growth in earnings will be a challenge next year.
One market analyst says it is certain that the growth rate achieved by the group will begin to decline next year as the recovery of Art is no longer so dramatic. Profit growth will have to be generated from strong performances in all the core operating divisions which, given the difficult macro -economic environment forecast for Zimbabwe, may not be that easy to attain.