Online Reporter
Nelson Gahadza
ZIMBABWEAN firms listed on the Zimbabwe Stock Exchange (ZSE) are prioritising volume recovery to defend their profit margins, riding on the stable operating environment.
This strategy is essential for maintaining competitiveness in a market marked by fluctuating demand and costs. As companies adapt to these challenges, they are also exploring innovative approaches to enhance efficiency and streamline expenses.
The stable exchange rate has provided a supportive environment for businesses to operate. This largely stems from low inflation and exchange rate predictability, anchored by prudent monetary policy management and other supportive Government measures.
In recent trading updates, selected manufacturing companies achieved reduced sales volumes, but are optimistic about recovery in the last quarter of the year.
Diversified packaging manufacturer Nampak Zimbabwe said group volumes for the third quarter to June 30, 2025 were 3 percent behind the prior year, mainly due to weaker demand and increased competitor activity for PET/preforms and commercial cartons.
The group’s metal volumes were also significantly down on prior year volumes in the quarter due to reduced demand and product rationalisation to align with market demand and achieve improved efficiencies.
“However, volumes across the business units are expected to improve in the last quarter, driven by stronger seasonal demand in the beverages sector and increased agricultural output,” he said.
The company highlighted that the paper operation is expected to benefit from increased volumes given the record-breaking tobacco marketing season.
“Volume recoveries are also expected in the plastics and metals operations as pricing distortions reduce on the back of a stable exchange rate,” said group chief executive officer Mr John Van Gend.
Willdale Limited, which is involved in brick manufacturing, said the business outlook remains highly positive and the company expects its property investment strategy to begin yielding material returns in the next quarter, with land sales and stand development providing a substantial boost to cash flow.
“This will allow us to modernise production technology, enhance efficiency and expand market share,” the company said in a trading update for the quarter ended June 30, 2025.
The firm said Zimbabwe’s sustained growth in housing and commercial infrastructure, driven by both Government and private sector initiatives, presents compelling opportunities for revenue expansion in the short to medium term.
“By combining sustainable production capacity with the strategic reinvestment of real estate proceeds, the company is well-positioned to capture these opportunities and deliver strong shareholder value.
“We are confident that Government initiatives to formalise business operations will level the competitive playing field, creating a fair and predictable environment for all market participants,” the company said.
However, low production led to a year-to-date revenue drop of 45 percent compared to the previous year. The company said average prices for the period rose by 10 percent above the prior year, supported by its strategic focus on high-value product lines.
“While the common brick segment continues to face competitive pressures, the company’s targeted approach in premium categories has cushioned performance and positions us for stronger returns going forward,” reads part of the update.
Economic expert Mr Persistence Gwanyanya said the performance of the real sector economy will bring permanent stability that will allow businesses to thrive.
“The positive outlook, with projected growth of 6 percent in 2025, gives us confidence of a more stable economy ahead,” he said.
“This growth is expected to be driven by the performance of the agriculture sector, which is itself susceptible to the vagaries of weather conditions, which presents downside risk to growth. This is why performance of the real sector economy is important to support stability.”
CAFCA anticipates a rebound in sales volumes, indicating that margin pressure will persist as the company defends its market share.
“Going forward, the priorities include strengthening engagement with utilities, mines, distributors and contractors; enhancing internal efficiencies to improve margins; pursuing manufacturing excellence and safety; as well as increasing communications to reinforce brand strength,” the company said.
It further said Government efforts to curb smuggling and the importation of substandard products through the Local Content Steering Committee positively influenced the market.
“This collaboration between industry and Government is a welcome development and CAFCA remains committed to supporting industrialisation through sustainable frameworks,” the company noted.
However, it added that the introduction of Statutory Instrument 157 of 2024, which opened the electrical cable market to imports, led to increased competition, eroding margins and volume growth.
Another economist, Mr Malone Gwadu, said operators in the economy should smoothen business operations and improve credit profiles for potential access to credit for expansion, which can potentially improve processes and enhance profitability in the long run.
Confederation of Zimbabwe Industries chief executive Ms Sekai Kuvarika recently said regulatory reforms that would allow for a more streamlined and competitive regulatory environment would unlock investment and the country can attract more foreign direct investment and retain existing investors.
“That will also promote competitiveness because a competitive regulatory environment would enable local businesses to compete more effectively in the global market, particularly with the African Continental Free Trade Area (AfCFTA),” she said.
Londile Moyo