HARARE, March 2, (The Source) – Electrical goods manufacturer Powerspeed has seen its pre-tax profit surge by 200 percent in the four months to January 2017 on the back of increased sales chief executive Hilton Macklin told shareholders at an AGM on Thursday.
An expanded product range boosted revenue, up 10 percent over the same period last year, Macklin said.
Powerspeed did not open new branches over the period, but broadened its product offering to include plumbing, paint, automotive parts and building materials. The firm also increased its floor space from 9,000 square metres to 9,400 square metres.
Macklin said the company’s operating expenses fell by 6 percent for the four months to January 2017 relative to the same period in the prior year.
However, Macklin said the company continues to face problems in importing products, saying the government’s import standards watchdog agent Bureau Veritas was increasing the time and cost of importing; negatively impacting inventory efficiency. He added that the company had increased the prices of the imported products due to the increased costs associated with importing.
Responding to a shareholder query on why Powerspeed had not paid a dividend since dollarisation in 2009, Macklin said the firm wanted to avoid capital calls on shareholders.
The company had, instead chosen to use internal funds to support growth.
“If you are growing in this environment, growth absorbs capital. If we could fund our stock by creditors, that’s great but we can’t, neither do local creditors have the ability to give us credit to the extent that we need, so we have to fund our own growth”, said Macklin.
Powerspeed chairman Simba Makoni promised that the company would pay dividends in the near future.
In the previous year, the company invested $1.2 million in the construction of a new branch, causing an increase in borrowings from $6.1 million to $7.1 million.