adminHarare Bureau
POWERSPEED Electrical Ltd reported that revenue for the full year to September rose 18 percent driven by retail sales after increasing products on offer by as much as 40 percent. Revenue, mostly from electrical goods, increased to $33 million from about $28,6 million a year earlier, chief executive Hilton Macklin told analysts in Harare yesterday.
The Zimbabwe Stock Exchange listed firm is largely trading under the Electrosales brand.
While the group added three stores during the year, much of the revenue was generated from the “existing stores.”
New branches were opened in Harare, Gweru and Chinhoyi while retail floor space was expanded in Bulawayo, Chiredzi and Masvingo.
Product lines increased to about 12,000 from 8,000 in the previous comparable period.
Gross margins marginally improved from 30,4 percent to 30,8 percent, resulting in growth of gross income of 19,6 percent to $10,4 million from about $8,7 million.
Expenses rose by 15,7 percent to $9,2 million while operating profit rose 40 percent to $1,6 million. Finance cost rose 16,2 percent to $645,331 from $554,570.
Net profit was $653,000 from $466,000 a year earlier while earnings per share rose 40 percent to $0,17.
“While we’re pleased with the growth in bottom line, the profit to turnover ratio, at 1,9 percent, is still below our target of three percent,” chairman Simba Makoni said.
“As a result the return on capital employed remains at desirable levels.”
Makoni said working capital limitations remained a major challenge.
“While our return on inventory is good, we don’t believe that it would be prudent to increase borrowings much higher than the current levels, so unless other sources of funding can be accessed, working capital will remain a limiting factor,” said Makoni.
Macklin said the strategy had shifted and would be “moving away from manufacturing” and will continue growing the trading business, focusing on products that go directly to end users.
But the group was not losing “sight of the wholesale business.”
The company will continue supplying products into the industry and construction sector. Both sectors are operating below capacity but the “market remains important.”
Powerspeed is facing competition from both formal and informal traders but will target high quality strong brands and continue expanding its product range.
The company has partnered an Indian firm, Fortuner and Meeco from Switzerland to supply solar products for domestic use.
The company has also introduced credit sales.
“We introduced credit retail sales at all our stores, which has allowed customers who were previously unable to fund projects to do so.
“Although the credit risk is fully insured, stringent credit control measures have ensured that delinquent debtors are kept within acceptable levels,” said Makoni.
Online Reporter