Bruce Whitefield
Dunlop Africa is considering shutting its manufacturing operation in Zimbabwe because it is becoming increasingly difficult to operate in that country. The company says it has no plans to close its distribution network of 20 branches that operate across the country, as there is still a huge demand for its products in Zimbabwe.
But chief executive Mike Hankinson, speaking on Moneyweb’s Classic Business radio programme, warned that it is becoming more and more difficult to run the struggling manufacturing business in Zimbabwe.
“One has really got to watch it on an ongoing basis, the distributor will not be closed. The manufacturer, well, we go through difficult times each week. We hope that we never get to that.”
It may become awkward for Hankinson to justify the manufacturing plant in Zimbabwe following the firm’s otherwise solid financial results released this week. Although headline earnings were up only four per cent, Dunlop Africa maintained its dividend and is reporting an upswing in business in January and February this year.
Things appear to be far rosier compared to last year when trading conditions were far tougher. Dunlop Zimbabwe did not declare a dividend and the political instabili-ty in that country last year has had management taking a long, hard look at its future viability.
International demand for its tyres has increased and the Dunlop plants have started operating around the clock. Profits from that division were up nearly 40% last year, but demand for its industrial products was down.
“There’s strong competition and reduced demand throughout the globe. We have found what we think is a niche sector now and we’re starting to export tyres into Europe, but it’s still early days and one hopes that it builds, but we’ve got a lot of work to do on that,” said Hankinson.