HARARE, November 13 (The Source) – The country’s largest retailer, OK Zimbabwe on Thursday reported a nearly 72 percent fall in net profit to $1,2 million for the six months to September 30 as liquidity in the economy tightened and household incomes plummeted.
Chief executive Willard Zireva told an analysts briefing that he believed the company had ‘stopped the haemorrhaging’ but its results showed declines across the board.
Revenue fell eight percent to $213,6 million while earnings per share dropped 70 percent to 0,11 cents.
Earnings before interest, tax, depreciation and amortisation (EBIDTA) at $5,4 million was 43,4 percent lower than in the prior period. Cash from operating activities dropped 43 percent to $5,4 million.
Zireva noted that despite the tightening liquidity situation, competition increased with rivals Meikles rolling out its Mega stores concept and increasing its Pick’n’Pay footprint while Botswana retailer Choppies continued to expand.
Most wholesalers were now offering retail services while grey imports ensured the presence of the informal sector, he said. OK Zimbabwe opened three more outlets to 63 stores.
“The informal sector remains alive, door to door sales, vehicles in car parks and open markets. This area continues to be key and relevant in the sector,” said Zireva.
The retailer, however, expects an improved second half after a strong performance in October, which Zireva said had achieved a profit equal to 50 percent of the half year performance.
“We expect that trend to continue, at least until the end of the year, but certainly we believe we have stopped the haemorrhaging,” said Zireva.
Its partnership with Kawena, a South Africa company, which enables Zimbabweans living in that country to buy groceries for relatives locally had taken off this year, with 52,000 users and moved between $2,5 million and $3 million per month.
Because of a change in the currency dynamics and regulatory environment, OK Zimbabwe had $12 million sitting in South Africa from the facility which it could not remit to Zimbabwe directly.
“We are negotiating with our suppliers who import from (South Africa) so they can use that facility and in effect we get the cash in Zimbabwe,” said Zireva, adding he expects to have the cash in the country in the ‘next few weeks.”
The money would offset its $3,4 million debt.
The company had a cash balance of $5,4 million from $14,6 million.