Zimbabwe: Hunyani Forecasts Improved Performance

Source from:  Financial Gazette (Harare) 03/15/2013

HUNYANI Holdings is forecasting an improved performance during the second half of the year powered by the company's rationalisation ad restructuring process, which resulted in the disposal and leasing of its non-core assets.
 
Speaking to The Financial Gazette's Companies & Markets after the company's annual general meeting last week, group managing director, Dave Bain, said volumes from all continuing operations were forecast to grow during the current year.
 
"Tobacco packaging volumes are forecast to grow due to higher crop size this year while commercial and export volumes would be higher than 2012," he said.
 
"Printopak restructuring would be completed by August this year but the division should return to profitability in the second half of the year which is usually to group's best operating period," said Bain.
 
Printopak's restructuring would involve the move of the lithographic plant from Bulawayo to Harare this quarter and the investment in a state of the art lithographic carton printer and label printer.
 
Part of the 2013 initiatives for the group include rationalising the 50 percent shareholding in Softex as well as complete Printopak restructuring.
 
"The restructuring would result in a reduction of manpower as well as see the introduction of shared services with Flexible products. We would dispose of surplus and obsolete equipment," said Bain.
 
Bain said Hunyani's half year results would be lower than last year because of losses at Printopak and a late start to the tobacco selling season.
 
He said the group's cash flows would be favourably affected by sale of non-core properties and plant and equipment.
 
As part of the restructuring, Bain said the group would also sell the Bulawayo and Norton properties.
 
"The proceeds from the disposals will fund projects that we have embarked on. The projects include the installation of generators on all three sites and a new tobacco line modification," he said.
 
In the year to October, Hunyani's turnover grew by a marginal one percent on continuing operations, while export sales grew by four percent.

"Operating profit was down 17 percent while the pre-tax line was down 16 percent as a result of the loss at Printopak. The division had recorded reasonable volume growth but was plagued by poor machine performance," he said.
 
The group had also suffered other comprehensive losses from the impairments of mill assets and Printopak. The operating margin was down from five percent to four percent.
 
The repositioning of Hunyani under the group's five year corporate capital plan was ongoing.
 
The company's Dumatau Waste Paper business was sold while Forest Producers in Marondera was leased. The Corrugated Bulawayo property had been sold so had the mill plant. The Pulp Mill and Chipper were not sold.
 
"We expect to have completed the sale of the Pulp Mill by the end of the second half of the year," Bain said.
 
Hunyani Holdings recorded a US$1,2 million profit before tax for the year to October 31, 2012.
 
In a statement accompanying the group's financial results, Hunyani said "it had successfully re-entered the export markets in the second half of the year, albeit at lower margins and this contributed to the profit that was recorded".
 
The company recorded a profit of US$1,4 million during the same period in 2011.
 
The company said its overall volumes fell by 10 percent owing to the disposal of non-core operations and weak domestic demand. Enditem