BY MISHMA CHAKANYUKA
Listed hardware chain, Electrosales, reported a profit after tax of ZWL$2,5 million in the six months to March compared to ZWL$2 million during the same period last year, but the company has warned of a bleak outlook in the short to medium term.
The company said it faced difficulties in sourcing stocks locally and internationally during the six-month period under review.
“As always, we remain optimistic about the long-term prospects of Zimbabwe, and the opportunities that these will bring to our business.
“However, the current situation, with increasing distortions, endless corruption and waste, accelerating regulation and a growing tax burden on the economy,
the short-term prospects for the Zimbabwean economy are bleak,” the company said in a statement accompanying financial results.
“Of concern is the growing informal sector, which does not comply with the mounting bureaucratic and financial burden that the authorities are placing on the formal sector.
“Every hurdle which is placed in the way of formal business is an incentive to the informal sector, so there is no wonder that the latter is thriving.”
Turnover was 62% up from the previous period to ZWL$60,1 million while gross margin fell from 28,1% to 24,1% because of a shift in product mixture.
The group’s operating expenses grew by 50% to ZWL$11 million due to a combination of the company’s branch expansion programme as well as inflationary
pressures, whilst borrowings reduced to ZWL$10,2 million despite the significant investment in both property and stock.
“Despite the difficulty in sourcing stock, both locally and internationally, we have been able to improve the range of products on offer to our customers both by way of different products, as well as different types of the same product, thereby increasing customer choice,” the company added.
“Having said that, we believe that we have identified a formula that works for both our customers and our shareholders.
“These strategies have enabled us to take market share from our traditional competitors, and grow our income despite a decline in spending power being felt by all our customers.
“We are, therefore, confident that we will continue to grow both throughput and profitability.”