Categories: Stories

OK Zimbabwe profit falls by 72 percent

The country’s largest retailer, OK Zimbabwe yesterday reported a nearly 72 percent fall in net profit to $1.2 million for the six months to September 30 as liquidity in the economy tightened and household incomes plummeted.

Chief executive Willard Zireva told an analysts briefing that he believed the company had ‘stopped the haemorrhaging’ but its results showed declines across the board.

Revenue fell eight percent to $213.6 million while earnings per share dropped 70 percent to 0.11 cents.

Earnings before interest, tax, depreciation and amortisation (EBIDTA) at $5.4 million was 43.4 percent lower than in the prior period. Cash from operating activities dropped 43 percent to $5.4 million.

Zireva noted that despite the tightening liquidity situation, competition increased with rivals Meikles rolling out its Mega stores concept and increasing its Pick’n’Pay footprint while Botswana retailer Choppies continued to expand.

Most wholesalers were now offering retail services while grey imports ensured the presence of the informal sector, he said. OK Zimbabwe opened three more outlets to 63 stores.

“The informal sector remains alive, door to door sales, vehicles in car parks and open markets. This area continues to be key and relevant in the sector,” said Zireva.

The retailer, however, expects an improved second half after a strong performance in October, which Zireva said had achieved a profit equal to 50 percent of the half year performance.

“We expect that trend to continue, at least until the end of the year, but certainly we believe we have stopped the haemorrhaging,” said Zireva.

Its partnership with Kawena, a South Africa company, which enables Zimbabweans living in that country to buy groceries for relatives locally had taken off this year, with 52 000 users and moved between $2.5 million and $3 million per month.

Because of a change in the currency dynamics and regulatory environment, OK Zimbabwe had $12 million sitting in South Africa from the facility which it could not remit to Zimbabwe directly.

“We are negotiating with our suppliers who import from (South Africa) so they can use that facility and in effect we get the cash in Zimbabwe,” said Zireva, adding he expects to have the cash in the country in the ‘next few weeks.”

The money would offset its $3.4 million debt.

The company had a cash balance of $5.4 million from $14.6 million.-The Source

(119 VIEWS)

Charles Rukuni

The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

Recent Posts

Reserve Bank of Zimbabwe expects more foreign currency sellers to join the interbank market

The gazetting into law of the payment of quarterly taxes on a 50-50 basis in…

December 4, 2024

Zimbabwe 2025 citizens’ budget

Zimbabwe has today unveiled a ZiG276.4 billion budget for 2025 during which it expects the…

November 28, 2024

To go or not to go- Mnangagwa in a quandary

Zimbabwe President Emmerson Mnangagwa has repeatedly stated that he is not going to contest a…

November 25, 2024

ZiG loses steam, falls against US dollar for five consecutive days

The Zimbabwe Gold fell against the United States dollar for five consecutive days from Monday…

November 22, 2024

Indian think tank says Starlink is a wolf in sheep’s clothing

An Indian think tank has described Starlink, a satellite internet service provider which recently entered…

November 18, 2024

ZiG firms against US dollar for 10 days running but people still do not have confidence in the currency

Zimbabwe’s new currency, the Zimbabwe Gold (ZiG), firmed against the United States dollars for 10…

November 16, 2024