HARARE, April 26 (The Source) – South Africa’s Pick n Pay Stores Limited saw a 150 percent profit jump from its Zimbabwean associate, TM Supermarkets, driven by a strong US dollar and improved efficiencies, the group said on Tuesday.
Pick n Pay owns 49 percent of TM Supermarkets, Zimbabwe’s second largest retail chain. The Zimbabwe-listed Meikles Africa owns 51 percent of TM.
Zimbabwe has used the United States dollar as its reporting currency since 2009, when the country abandoned its inflation-raveged currency.
Announcing the South African retailer’s full-year to March 2016 financial results on Tuesday, Pick n Pay chief financial officer Bakar Jakoet said the African division delivered 8.8 percent revenue growth to R4 billion despite difficulties in Zambia mainly due to the 20 percent devaluation of the Kwacha during the course of the year.
Pick n Pay’s Rest of Africa segment contributes just over five percent of the group’s R72,4 billion revenue for the full year
“The group benefited from an improved financial performance in TM, our associate in Zimbabwe, which was driven by stronger trade in the region and improved operational efficiencies,” Jakoet said.
“There was some benefit from the stronger US translation; however, in constant currency terms profits were up more than 150 percent.”
Firms with foreign operations use constant currency calculations to eliminate the effect of exchange rate fluctuations on their financial numbers. South Africa’s rand-to-US dollar rate averaged 13 throughout 2015, according to traders’ data.
TM’s detailed financial performance is expected to be revealed when parent company Meikles, which also has a March 31 year-end, presents its 2016 financial year results in the coming weeks.
In the 2015 financial year, TM recorded $356 million revenue and $2,7 million net profit. Over the same period, OK Zimbabwe, the country’s largest supermarket chain with 61 stores, registered $462,7 million revenue and $7,5 million profit.