OK Zimbabwe profit plunges 91 percent

OK Zimbabwe reported an 88 percent decline in operating profit at $1.3 million for the year ended 31 March 2016 compared to $10.7 million in prior year as the increasingly competitive retail sector contends with declining consumer spend.

Profit after tax and finance charges fell by a massive 91 percent to $700 000, from $7.5 million previously.

OK Zimbabwe, the country’s largest retail group, is often considered a bellwether for the nation’s economy.

Earnings Before Income Tax Depreciation and Amortisation (EBITDA) was 48.9 percent down, at $9 million from $17.7 million in the prior year.

Finance Director Alex Siyavora told analysts at a briefing late yesterday that the 5.4 percent decline in revenue to $437.5 million was a result of reduced volumes and price markdowns.

Gross margin was at 16.1 percent compared to 17.8 percent in 2015 largely on product mix and significant mark-downs during promotions and obsolete stock.

Siyavora said overheads went down 3.3 percent as staff costs dropped 10 percent while some service providers extended reduction in charges and tariffs.

Stock turn down was at 47 days against internal standard of 30 days. In the prior year, it was at 41 days.

Capital expenditure for the year was at $4.4 million compared to $11.3 million in prior year.

Chief executive Willard Zireva described the results as disappointing and pointed out that the environment is likely not to change in the near term hence the company will continue to leverage different platforms to achieve growth.

He said the company will ride on the Kawena project to sustain product availability from South Africa, at the same time expanding its financial services contribution.

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