Shame Makoshori, Chief Business Reporter
DIVERSIFIED industrial concern, Apex Corporation, will this year restructure and recapitalise its businesses as it prepares to swing back to profitability, riding on bullish international metal prices and the anticipated recovery in the country's mining industry.
While it is still not clear which path chairman, Farai Rwodzi and his team would steer the group, sources said Apex might dispose off some foundry units to raise funds and streamline its head office in order to adopt a lean structure.
A significant number of under-capitalised counters are already embarking on rights issues to raise cash needed to ramp up production and satisfy bullish local and export demand post the domestic and global economic meltdowns.
Last month, industrial chemicals producer, Chemco Holdings, said it was undertaking a similar realignment exercise and will be disposing off non-core operations to fund its operations.
Apex’s turnover ended the year to October 2009 at US$7,3 million and was in line with revenues reported by other industrial concerns.
High depreciation and net financing costs of US$611 000 and US$45 000 however, gnawed into the group’s revenues with Phoenix Consolidated Industries’ operations being undermined by four months of trade in the Zimbabwe dollar at the beginning of the period under review.
Phoenix is a subsidiary of Apex.
Volumes at Philpott and Collins, another Apex subsidiary, were down 60 percent due to depressed demand.
Apex’s foundries temporarily halted operations between December 2008 and February last year after mines either scaled down operations or completely shut down in response to currency distortions caused by the poor policies that prevailed then, power shortages and difficulties in accessing payment for gold delivered to the Reserve Bank of Zimbabwe.
“It is evident that the group’s operating entities will need to be re-organised in order to improve efficiencies and raise capital. Further details of the group’s restructuring and financing initiatives would be communicated to shareholders in due course. We remain confident of the economic stability of Zimbabwe and hence believe that after the restructuring your group's standing would return to profitability in the short term,” Rwodzi said in a commentary accompanying the results.
“The slow recovery of the mining and agricultural sectors impacted negatively on the performance of the group as most of the mining firms that had closed during 2008 failed to resume operations while others struggled with working capital limitations,” he added.
Zimbabwe's mining industry, which forms the core of Apex’s market, traded on the brink of collapse in 2008 as the decade-long economic crisis escalated.
Year-on-year inflation hit 231 million percent in July 2008 sending key gold and nickel mines into acute viability problems.
Gold miner, Metallon Gold Zimbabwe, had to shutdown all its five operations that employed more than 5 000 workers. Last week, South Africa’s SRK Consulting was still preparing an independent technical report to enable AIM-listed Mwana Africa to secure funding for the reopening of its closed Bindura Nickel Corporation.
Performance of the agricultural sector, another key market for Apex, has been affected by poor planning and also erratic rainfall.
Apex’s operations were also hit by the collapse of steelmaker, the Zimbabwe Iron and Steel Company, and bottlenecks in coal supplies from Hwange Colliery Company Limited.
Rwodzi was confident that the loss suffered last year would be overturned.
“Global metal prices are firming and demand for mill balls is set to increase for both the local and export market,” he said.
“Post year end, a monthly export order of 1 000 tonnes has been established. The market for grey products in South Africa has remained strong with the company still failing to fulfill orders... some investments in new equipment would be required in order to improve productivity, efficiency and reduce costs,” the Apex boss added.
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It's now the time for Apex and other giants in the steelworks consider backward integration by establishing ore processing facilities given persistent and unending chaos at Zisco and Hw**ge.