Powerspeed PAT surges

HARARE - Zimbabwe Stock Exchange-listed Powerspeed Electrical Limited (Powerspeed) profit after tax for the half year to March 31, 2018 surged to $2 million from $581 000 prior comparable period buoyed by an increase in throughput.

The group said its turnover, at $37,2 million, was 55,3 percent up on the previous period, with the company lifting its gross margin slightly, from 26,3 percent to 28,1 percent, mainly through improved sourcing.

“Operating expenses grew by 37,6 percent, to $7,4 million, driven by the branch expansion programme. The net result of which was a 180 percent increase in operating profit, from $1,19 million to $3,32 million,” the firm said in a set of published financials for the half year.

Borrowings however remained significant, at $9,9 million, as a result, finance costs increased by 39,6 percent, to $566k.

“However, given our recent investments in property and in inventory to feed the growth in throughput, we believe that this level of borrowings is less concerning than in previous years.

“Attributable profit after tax came in at just over $2 million, significantly up from the $581 000 reported for the corresponding period last year,” Powerspeed said.

Despite the poor performance of the economy, generally leaving consumers with very limited disposable incomes, Powerspeed said it was encouraged by the substantial growth in throughput that our business has achieved.

“During the period under review, we have seen an increase in throughput, which has resulted in an improved contribution from the division.

“The improved levels of business optimism and activity, particularly in mining, are steadily improving demand.

“As a result, throughput and profitability in the operation, grew from $888 000, to $1,4 million, and $52 000, to $216 000, respectively,” the electricals concern said.

The group anchored its hopes on a credible poll this July, adding this would assist in normalising Zimbabwe’s relations with the rest of the world.

“…This will also bring us back into the global economy; thereby unleashing the potential of both our country and our business.

“We have identified a number of opportunities for increasing our footprint in the market, and we will be moving to open more branches.

“This will improve our market share in areas where it is currently weak, without negatively affecting the existing branch network,” the company said.

Given the rate of growth in throughput, and the relatively high level of borrowings, the board considered it prudent not to declare a dividend for the half year period.

“However, we are very cognisant of the fact that we have not paid a dividend for many years. In this regard, we express profound gratitude to our shareholders, for their understanding and patience.

“Assuming the economic climate does not change for the worse and that the business maintains the current performance levels, we believe that the board will be in a position to consider the declaration of a dividend at the end of the current financial year,” the firm said.

— The Financial Gazette

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