Masimba turnover down 25%, blames Chinese

Malunga right, with Tapera

Published: 26 June 2014

CONSTRUCTION concern Masimba Holdings turnover in the five months to May slipped 25% following a weak performance from the construction division whose turnover is down 33%.

Addressing an Annual General Meeting (AGM), Chief executive officer Canada Malunga expressed concern over the dominance of the Chinese in the construction sector in the country.

"As a construction company we embrace the economic blueprint Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZIMASSET) that the government has brought forth, in a bid to empower local people and upgrade the lives of Zimbabwe but in the process they are turning a blind eye on the dominance of construction companies by the Chinese," said Malunga.

"Correspondingly the GP margins are holding on 2013 but the impact of the turnover decline has an adverse impact on the EBITDA line," said Malunga.

EBITDA is at a negative $127 000 an improvement of the negative $263 000 last year. Operating overheads, an area Malunga said the group was paying close attention to were down 18% and are estimated to close the year down between 20-25 percent.

The order book to December was at $52 million; $23 million of which was active. Malunga however said progress on the active order book was slow due to the liquidity challenges facing infrastructure clients. He added that discussions on rescusitating work on the inactive order book are ongoing.

"We anticipate that works on the main Education infrastructure projects will resume before year the end of the year."

In a bid to overcome the threat by the construction companies by the Chinese he encouraged the government to urge Chinese contractors now dominating the construction space to work with local contractors so they preserve and rebuild local contracting and engineering capacity.

The company’s performance to December 2014 is forecast to be depressed due to lack of competitively priced capital to fund infrastructure projects, the statues of the PSIP will be aggravated by the poor state of the economy and the public sector finances in particular.
- businessconnect

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