OK Zimbabwe FY profit 22pct down as depressed demand persists

OK Zimbabwe FY profit 22pct down as depressed demand persists

HARARE, May 22 (The Source) – OK Zimbabwe, the country’s largest retailer, on Friday reported a 22,2 percent decline in after-tax profit in the year-ended March 2015, largely attributable to persistently depressed consumer demand.

After-tax profit was $7,5 million, down from $9,7 million in 2014, OK said in financials published Friday. Revenue was also 4,3 percent down at $462,7 million from $483,7 previously.

Economists have warned Zimbabwe’s economy could be sliding back into recession after successive years of growth since 2009 when the country dollarised.

Although government and the International Monetary Fund have forecast growth at 3,1 percent and 2,8 percent, respectively, independent economists such as John Robertson fear the economy could actually shrink by as much as 5 percent this year on the back of another poor harvest and declining factory output, among other factors.

“Disposable incomes declined further and decreases in prices of goods across the various product generics continued with the government statistics office reporting deflation of 1,2 percent by March 2015,” OK said.

“Our internal deflation figure is even higher at about 3 percent.”

OK said it had managed to keep finance costs under control, at $270,000 (2014: $232,000). Capital expenditure for the year was $11,3 million (2014: $12,4 million), with much of it being spent on two new stores (Borrowdale Brooke Bon Marche and Kwekwe OK Mart) and the refurbishment of four others in Harare, Mutare, Gweru and Rusape.

OK plans more stores in the current year – OK Mart outlets in Mutare and Victoria Falls as well as an OK branch in Zvishavane – while refurbishment work will be done in Harare (OK First Street) and Marondera. A new store is also planned for Houghton Park in Harare.