CONSTRUCTION firm, Masimba Holdings Limited, says the liquidity crunch had constrained the firm's ability to execute its order book during the financial year ended December 31, 2024.
Since the introduction of the Zimbabwe Gold currency on April 5 last year, the market has experienced a severe liquidity crunch, attributed to a tough stance by monetary and fiscal authorities as part of measures to support the local currency.
“The contracting order book remained robust, particularly in the roads sector. However, a lack of liquidity within the market hampered effective execution, leading to cash flow challenges and an increasing debtors’ book,” Masimba said in a statement attached to its financial results for the year ended December 31, 2024.
“This constrained the business’s ability to fund ongoing projects and manage operational expenses, causing delays in project execution. The growing debtors’ book further strained financial stability, exacerbating the liquidity crunch and creating a cycle of financial pressure that limited growth and operational efficiency.”
Consequently, revenues for the year were US$56,1 million compared to 2023’s US$53,8 million, representing a 4% growth.
Revenue growth was driven by a strong and stable order book, primarily from the roads and mining civil segments, the company said.
“However, the tight monetary policy hindered target execution,” Masimba said.
Capital expenditure (capex) for the year stood at US$2,5 million, from a 2023 comparative of US$4,2 million.
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Most of this capex was primarily allocated to modern equipment to enhance operational efficiencies.
“This investment was financed through vendor financing structured over a five-year period, aligning with the long-term perspective of capital expenditure acquisition and ensuring sustainable financial planning,” Masimba said.
“Total borrowings increased to US$2,5 million (2023: US$2 million), reducing the gearing ratio to 7% (2023: 8%). Total assets increased by 7% to US$92,3 million (2023: US$85,9 million), driven by contracts in progress and contracts receivables.”
Masimba said total assets increased by 7% to US$92,3 million (2023: US$85,9 million), driven by contracts in progress and contracts receivables.
The firm had US$1,23 for every dollar of short-term debt, leaving the firm in a liquid position as of 2024.
Profit after tax was down 15,31% to US$6,39 million last year, compared to the prior year, owing to a significant increase in income tax.
Masimba reported an income tax of US$2,01 million, compared to the 2023 comparative of US$325 225.
“Government economic stabilisation efforts may lead to improved investor confidence, facilitating public and private sector projects. Infrastructure development remains a priority, supported by both governmental initiatives and foreign investment,” Masimba said.
“However, challenges such as inflation, tight monetary policy and regulatory hurdles could hinder growth. A focus on sustainable building practices may also emerge, driven by global trends. Overall, while growth opportunities exist, careful navigation of risks will be essential for the sustainability and success of the construction sector.”
In the outlook, the group is projecting growth in turnover and profitability, supported by a strong order book and diversification strategies in the infrastructure development space.
