COMMENTARY
INTRODUCTION
The first half of the year ending on 31 March 2024 posed numerous challenges. Despite these hurdles, our team’s efforts led to a continued growth in our business volumes.
FINANCIAL PERFORMANCE
For the first time, we have adopted the United States Dollar as our reporting currency. This change has introduced complexities, particularly in the conversion process between Zimbabwe Dollars and US Dollars, which may result in some discrepancies. These challenges have also impacted our comparative figures. The directors were of the view that applying IAS 21 would have led to significant distortions in the financial statements.
Our revenue saw an increase from USD 46.8 million to USD 58.2 million. Concurrently, our gross profit escalated from USD 9.8 million to USD 14.2 million. Operating expenses witnessed a rise from USD 7.9 million to USD 9.9 million, resulting in an operating profit of USD 4.2 million, a significant improvement from the previous USD 2.0 million. Profit after tax also grew, moving from USD 1.2 million to USD 2.9 million.
The period under review marked a notable increase in shareholder equity, climbing from USD 40.6 million to USD 49.1 million.
REVIEW OF OPERATIONS
Electrosales Hardware
The half-year did not see new branch openings or relocations. Instead, we concentrated on enhancing branch content, achieving substantial improvements in merchandising, focused marketing efforts and product displays.
Our commitment to ensuring maximum product availability and expanding our product range has led to an increase in sales volume compared to the previous year. However, the market size remains unchanged, and we face significant competitive pressure on pricing. The growing consumer preference for more affordable, albeit lower quality products, is compressing our margins. This challenge is further intensified by the expansion of informal trade within our sector.
OUTLOOK
The increasing regulatory burden, complexity, and escalating costs of conducting business in Zimbabwe are gradually eroding the formal business sector. In contrast, the informal sector is largely exempt from these challenges, contributing to the economy’s informalization – a trend that poses a continuous threat to our business and other formal enterprises.
Nevertheless, strong remittance flow from the diaspora are fueling a surge in residential construction nationwide, thereby boosting the demand for building materials. We have significantly enhanced our capacity to serve this market segment and anticipate further growth from this demographic.
In May 2024, we celebrated the opening of our 23rd branch at Madokero Mall, Tynwald. The initial performance has been encouraging, and we look forward to its continued success.
Considering these factors, we remain optimistic about achieving sustained growth in the future.
DIVIDEND
In light of the prevailing uncertainties confronting businesses in Zimbabwe, the Board has deemed it wise to refrain from declaring an interim dividend for the half-year ended 31 March 2024.
By Order of the Board
M.S Gurira
Group Company Secretary
6 June 2024
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Powerspeed Electrical is a leading supplier of electrical products and services; trading through its own chain of hardware retail outlets known as Electrosales Hardware. The company supplies electrical products and solutions to the painting, plumbing, electrical, building, hand and power tools, outdoor and gardening, and automotive industries in Zimbabwe. Powerspeed Engineering is a subsidiary company involved in rewinding electric motors, supplying industrial fans and ducting for commercial and industrial applications, fabrication of non-standard steel products and structures, and commercial and industrial light fittings, heating elements, distribution boards and domestic irons. The engineering division is the amalgamation of three leading industrial engineering companies; Airflow, Relmo and ELS.