GB Holdings Limited has reported a subdued performance for the half year ended 30 June 2026, with profitability declining on the back of lower volumes, pricing pressure from cheap imports and working capital constraints.
The company said the operating environment remained under pressure from continued conflict in the Middle East and Europe, which exerted pressure on raw material costs through volatile crude oil prices and more expensive alternative cargo routes, as well as the United States’ push to reassert itself through tariff increases and funding cuts, which dislocated global economies including Zimbabwe’s. The inflationary effect of oil price increases was mitigated by the government measures targeting price stability, while a stellar performance by the mining sector and a recovering agricultural sector bolstered foreign currency reserves, enabling firms to access foreign currency on the willing-buyer, willing-seller market with relative ease. ZWG and USD inflation stood at 4.7 percent and 3.1 percent respectively as at June 2026 according to ZimStats, but the drip release of local currency was inadequate to stimulate aggregate demand.
The company said despite deliberate policy initiatives to promote locally manufactured goods through import substitution, increases in power, labour and utility costs rendered locally produced goods uncompetitive against relatively cheaper imports. Local agents of cheaper imports were preferred suppliers due to their shorter working capital cycles, while manufacturers endured high stock holding and interest costs, with the technical skills flight risk widening as regional competitors attracted competent skills from Zimbabwe.
Against this background, the company delivered a competitive product offering and competent technical backup service, with investment in enhanced internal process efficiencies and improved customer relationships enabling it to match competition and grow the order book. However, following the downgraded Zimbabwe credit risk in the first quarter of the year, key raw material suppliers cut credit extended to the company and demanded cash payment upfront, leading to uneconomic factory throughput at General Beltings. To counter pricing limitations, General Beltings adopted a product diversification strategy into other rubber moulded products whose demand in the mining and agricultural sectors has been rising, while Cernol Chemicals’ market recovery efforts yielded a notable uptick in the dairy and tourism sectors through its enduring product quality offering.
On Group performance, overall volumes at 420 metric tonnes were 5 percent lower than the comparable period’s 438 metric tonnes due to working capital constraints. Cernol Chemicals volumes at 221 metric tonnes were 14 percent lower than the prior year period’s 257 metric tonnes due to a slow start in the first quarter, while General Beltings volumes at 199 metric tonnes were 10 percent up on the prior year’s 181 metric tonnes as the market responded positively to initiatives to match competitor prices in its niche markets.
Although total volumes were 5 percent lower, turnover at USD2.053 million was 9 percent lower than the comparable period’s USD2.242 million as recoveries per metric tonne aligned with market trends to fend off price competition from cheap imports. Consequently, gross profit at USD658,000 was 24 percent lower than the comparable period’s USD894,000. In response to increased price competition, operating costs at USD658,000 were 17 percent lower than the prior period’s USD791,000 as cost reduction was imperative in a USD inflationary environment, resulting in an operating profit of USD53,000 against a comparable prior year period’s USD125,000. Profit for the period was USD29,727 compared to USD80,852 in 2025.
Looking ahead, the company said the performance rebound in the latter half of the year is premised on securing sufficient raw materials to convert a healthy order book at General Beltings and a seasonal holiday peak demand at Cernol Chemicals. Both divisions are expected to benefit from the mining sector buoyancy and growth in the tourism sector respectively, with continued growth in the dairy sector further propelling demand for products from Cernol Chemicals, while the company remains alive to concentration risk in the mining sector and is making promising forays in non-platinum sectors.
On dividend, the company at its meeting on 28 September 2026 found it prudent to reinvest in working capital to meet product demand and resolved not to pay an interim dividend for the period under review.
