HARARE – Zimbabwe’s biggest retailer OK Zimbabwe Limited’s revenue for the half year to September 30, 2019, improved by 237,4 percent to $1,1 billion from $330,1 million during the same period last year, despite the prevailing economic challenges in the country.
Profit before tax went up by 1 498 percent to $185 million from $11,6 million, while profit after tax increased by 1 463 percent to $131,9 million.
The group’s net asset value per share almost doubled to 66 cents from 37 cents recorded in the prior year comparable period.
The group closed the period with total assets amounting to $1,2 billion.
During the period under review, overheads growth was restricted to 229 percent, which is below the revenue growth of 237 percent.
OK attributed the overheads increases to among other things, fuel for generators and vehicle fleet repairs and maintenance costs, staff costs, bank charges, contingent rentals and interest on lease liability arising from the adoption of International Financial Reporting Standard 16 (IFRS 16).
According to the retail giant, the cost lines that increased most significantly were those corresponding directly with sales generated as well as those that have import components. Capital expenditure for the period also went up to $51,5 million from $7,5 million for the comparative period as the group continued with its refurbishment programme.
Meanwhile, the group attributed the decline in its volumes by 23 percent to inflationary pressures that have eroded disposable incomes.
Lately, consumers, have been struggling to keep pace with the wave of frequent price escalations as the majority of formally employed population have not been awarded salary increases commensurate to the obtaining cost of living.
It is estimated that food basket alone for a six member family now stands at around $4 000 a month leaving little or no funds for extra spending.
Notwithstanding these challenges OK Zimbabwe Limited remains optimistic of future prospects.
“Despite the difficult conditions, the group’s stores remain reasonably stocked for the festive season and beyond. While price increases have been frequent because of the instability in the market, the Group will continue in its efforts to deliver the best possible value to its stakeholders,” said group chairman Herbert Nkala in a statement accompanying the group’s financial results.
“The Zimbabwe dollar (ZWL) has depreciated markedly since its introduction and contributed significantly to price increases in the period under review.
“The scarcity of foreign currency slowed down the importation of goods and this, combined with high prices of goods that were available, slowed down consumption particularly in the second half of the reporting period. Resultantly, volume sales declined by 23 percent compared to the same period last year,” said Mr Nkala.