Zeco Holdings is optimistic of a turnaround in fortunes following its strategic shift to residential and commercial property development.
The Zimbabwe Stock Exchange (ZSE)-listed company is owned by flamboyant businessman Philip Chiyangwa.
The group that traditionally built rail wagons and locomotives through its subsidiaries for utilities in Zambia, Tanzania, Mozambique, Ethiopia and Kenya announced last year that it was transitioning from a “rolling stock” business to a property development company.
Despite extending its losses last year. It remains optimistic about its new focus.
“We also expect new business once we complete the construction of the new shop space. The business will continue to positively innovate in the competitive environment by pursuing new market segments including the construction industry for our other business unit,” said Zeco in its first quarter trading update.
On the shop space side, shop occupancy stood at 69.57 percent, an improvement from 53.33 percent for the same period last year.
“The moderate occupancy rates are indicative of the space side entering the growth stage whilst construction and renovations take place,” added the group.
During the period under review, revenue saw a positive improvement compared to the prior year, mainly driven by inflation.
The revenue for the prior year’s first quarter was ZW$ 63.99 million, historically, compared to the current year’s first quarter of ZW$ 1 165.20 million.
“The performance of the group largely depended on the economic environment which affected the cost of production and operating costs. However, at a group level we realized revenue also from our shop space business resulting in a positive effect on working capital,” said Zeco.
The company expects the tight monetary conditions to continue with less liquidity in a bid to stabilize the new local currency, the Zimbabwe Gold (ZiG).
The company’s loss grew to ZW$3 billion from ZW$18 million the previous year which the group attributed to the strategic shift to new business.
