eBusiness Weekly
Enacy Mapakame
Powerspeed Electrical Limited’s revenue for the year to September 30, 2022 more than trebled to $26,9 billion from $8,7 billion albeit a tough operating environment.
Management said the period was characterised by currency and exchange rate volatility which weighed on businesses across sectors.
“The past twelve months proved to be extremely challenging for businesses and households alike,” said Powerspeed chairman Dr Simba Makoni.
“Inflation, leading to rising expenses, increasing regulation, informalisation, tight liquidity, interest rates, dollarisation and exchange rate disparities, and corruption; all combined to make the conduct of formal business difficult.
“Despite these difficulties, the group had a reasonable year, with an overall increase in volumes traded compared to prior year. The execution of multiple strategies to increase market share in several areas, bore fruit,” he said in a performance update for the period.
However, the review of interest rates by Government during the period had a knock on effect on the business.
Dr Makoni said: “The massive increase in interest rates in the last quarter of our financial year, had a significant negative effect on our business. This was compounded by a substantial decline in throughput, in Zimbabwe dollar sales.
“Fortunately, we have been able to clear all our Zimbabwe dollar borrowings, thereby shielding ourselves from further negative impact of the interest rate escalation.”
During the period under review, operating expenses rose to $5,9 billion from $1,5 billion in line with rising cost of goods and services. As a result, operating profit rose to $1,4 billion from $294 million recorded in the previous year. Profit after tax rose to $582 million from $154 million.
“We remained focussed on growing throughput, and building real balance sheet value, both of which have been achieved during the year under review,” said Dr Makoni.
Shareholder equity grew to $8,2 billion from $2,1 billion in the prior period comparable representing a 14,7 percent growth in real terms.
For Electrosales Hardware, maintaining reliable supplies of product proved to be extremely difficult, according to Dr Makoni.
Suppliers in China have been severely affected by Covid-19 lockdowns, and shortages of containers disrupted shipping throughout the year.
Apart from the effects of Covid19, suppliers in South Africa have also been buffeted by power cuts, as well as widespread industrial action, particularly at Portnet.
Powerspeed however, implemented some measures to cushion the business against the micro and macro challenges.
“We continued to invest in stock and systems, and this has enabled us to further improve product availability in all our stores. This product availability has undoubtedly contributed to the increase in throughput over the reporting period.
“Whilst sales volumes have recovered, we are seeing accelerated dollarisation, with most product suppliers, and other service providers, demanding payment in USD,” said Dr Makoni.
During the period, Electrosales Hardware opened its twenty-first branch in Kadoma, its first purpose-built store. The branch has been profitable from its first month, and throughput has been growing steadily ever since.
