Rubber Producer GB Holdings‘ gross profits dropped by 11% to ZWL246 million in 2021 from ZWL278 million as a result of inflation according to the company’s chairman G. G. Nhemachena.
The company also recorded a net operating profit of ZWL44 million against the prior year’s ZWL140 million.
Nhemachena says,” Unrelenting inflation and the strengthening of the Rand against the United States Dollar contributed in the increased production costs and put pressure on gross margins.”
Operating costs increased by 35% ZWL203 million from ZWL 150 million due to costs that tracked the parallel exchange rate.
GB Holdings expects inflation and the war in Ukraine to cause negatively impact the company’s progress.
The group’s chairman says that the optimism that emerged following the mitigation of the COVID pandemic scourge has quickly faded given the Russia Ukraine conflict that threatens to plunge the world into chaos, particularly the sources of primary raw materials.
“Recent price increases in fuels and natural gas signal more severe measures that will inevitably constrain logistical supply chains and thereby dislocate the growth trajectories of the global economy,” Nhemachena says.
“The much anticipated bumper harvest will be negatively affected by erratic rain pattern in the latter part of the season. As a result the food import bill will exert pressure on the already scarce foreign currency inflows thereby weakening the Zimbabwe dollar further against the United States Dollar. Therefore price inflation will inevitably reduce aggregate demand in the economy.”
GB Holdings has however managed to benefit from its technical partnerships as the flow of materials was sustained despite violent disruptions in South Africa and the logistical delays further afield in countries of raw materials origin.
Nhemachena also raised optimism and said, “General Beltings is expected to increase its market consolidation as the anticipated logistical constraints emanating from the conflict will compel its existing customers to replace imports with locally produced products.”
