Powerspeed in massive profit growth

HARARE - Powerspeed Electrical (Powerspeed) says its profit after tax surged 285 percent to $4,201 million during the year ended September 30, 2018 from $1,091 million reported during the previous comparable period due to an increase in volumes.

Powerspeed’s chairperson Simba Makoni, said turnover for the year was up 53,2 percent to $82,5 million while gross margin was up 66,2 percent to $22,1 million.

“The key strategy for the year was growth in sales volume, with a resultant improvement in our purchasing power. To mitigate the erratic supply lines we increased inventory.

“Although increased inventory meant high levels of borrowings it also meant good growth in income, market share and more importantly profitability,” he said.

He added that the Zimbabwe Stock Exchange-listed firm’s borrowings remained high as Powerspeed was forced to hold additional inventory.

Inventory was up from $14,604 million to $19,635 million during the period under review.

During the review period, the group saw a reduction in throughput in the last two months due to economic uncertainty.

“Unfortunately, we have seen a reduction in throughput in the last two months because the economic uncertainty has been exacerbated by significant upward pressure on expenses as suppliers and service providers attempt to preserve or regain value lost as a result of the exchange differential between the RTGS dollar and the US dollar,” Makoni said.

During the period under review, the group faced erratic supply of local and imported products.

“Imports were hampered by various trade barriers, notably Bereau Veritas, import licences, punitive duties and restrictions on foreign payments.

“Local manufacturers also experienced similar problems in sourcing raw materials in addition to operational constraints such as power cuts and high costs of production,” Makoni said.

Assets were up to $36,762 million during the period under review from $27,710 million recorded in previous comparable period.

The group’s turnover increased 53 percent to $82,5 million.

Powerspeed declared a dividend of 0,4 cents per share — for the first time in over a decade.

The group said excessive consumptive government spending has led to a growing disparity between the value of the RTGS dollar and the US dollar.

“Despite the political changes that occurred last year, the economic direction of the country remains unclear.

“The fiscal and monetary policies announced in October and in the budget last week have added further burdens to the formal economy of Zimbabwe,” Makoni said.

Despite these burdens likely to depress growth of the economy, Powerspeed said it is hopeful that some statements by government leaders signify positive policies and actions in future.

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