daniel chigunwe
Enacy Mapakame
Electricals and hardware supplier, Powerspeed Electrical Limited, recorded a 500 percent jump in revenue to $42 billion for the half year to March 31, 2023 compared to the same period last year on volume increase.
The group has maintained a strong focus on product availability and a diverse product portfolio as ways to push volumes.
Gross margins rose to $7,22 billion compared to $1,68 billion during the same period in the prior year. The figures are on a historical cost accounting basis.
“Because of the absence of a credible inflation index, the complexity in the production of, and the difficulty in the interpretation of, hyperinflation accounts, it has been decided not to present these,” said the group.
Operating expenses climbed to $5,36 billion from $1,18 billion, giving an operating profit of $1,86 billion, up from the previous $650 million.
Profit after tax rose to $1,15 billion from $416 million.
During the period under review, there was significant growth in shareholder equity, which rose to $12,3 billion from $8,2 billion. In real terms, the growth in equity value per share was approximately 9,87 percent during the six months under review.
During the half-year period, Powerspeed moved its Electrosales branch in Avondale to a bigger space and brand new building.
“The building, our second that is purpose-built, is also our biggest branch with 2 860 metres under roof. Turnover in this branch has been growing steadily and feedback from customers is very good,” said Powerspeed.
“A continued focus on ensuring maximum product availability and increased product range and choice has, once again, ensured an increase in volume over the same period the previous year.
“The market, however, is not growing and there is significant competitive pressure on pricing as well as growing consumer demand for cheaper, lower quality products which is driving margins lower,” said Powerspeed.
The electricals supplier added the growing informalisation of the economy has also added to the strain.
According to the World Bank, Zimbabwe is one of the countries with the largest informal sectors, accounting for a significant chunk of transactions in the country.
Overall, it is one of the biggest in the world as a share of total economic activity. Market watchers have also opined the informality of the economy has weighed on the formal businesses, a situation likely to continue due to the obtaining economic challenges.
“The ever-increasing regulation, complexity, and rising cost of doing business is steadily undermining the formal business sector in Zimbabwe.
“Conversely, the informal business sector is not subject to many of these difficulties, which is driving the informalisation of the economy. This trend will continue to threaten our business along with all other formal businesses,” said Powerspeed.
On a brighter side, strong funds flow from the diaspora is driving a boom in residential construction throughout the country, which is, in turn, driving demand for building materials.
This presents opportunities for the group as suppliers of building materials while branch network expansion is also expected to be beneficial to the group.
Said Powerspeed: “We have substantially improved our ability to service this market and we expect continued growth from this source.
“Our branch development program is continuing, and we will be opening a substantially improved and expanded branch in Msasa this month. Our new building in Zvishavane is nearing completion and we will be opening this within the next quarter. In the light of the foregoing, we anticipate sustained growth going forwards.”
Bongani Ndlovu