New Zimbabwe (London)

Zimbabwe: Powerspeed Transforms Operations

POWERSPEED Electrical Limited which says it is now 98 percent indigenised, has transformed itself into a supplier of general hardware. The company's nature of business is electrical engineering and retail of hardware through 14 outlets countrywide.

Managing director Hilton Macklin said the company was no longer just an electrical distributor but a supplier of hardware in the broadest sense.

He said this at the company's analyst briefing were he said the electro-sales Hardware brand had continued to improve its already good position as the foremost supplier of hardware products with continuous improvement to the range of products on offer.

"We believe that Zimbabwean consumers deserve and will demand first class service from their retailers and we believe that we can provide this," said Macklin about the company's outlook.

"This will be a core strength going forward and put the group in a strong position as Zimbabwe progressively re-integrates into regional and global markets," he said.

Macklin said the company's gross profit rose to US$8,69 million from US$8,2million, with margin up to 30,4 percent from 28 percent, primarily because of the move from industrial to retail sales which have better margins.

Earnings Per Share was down to 0,12c from 0,14c while on the balance sheet borrowings were unchanged at US$3,8 million although costs were reduced.

Operating expenses went up to US$7,97million from US$7,28 million because of branch expansion but central expenses were kept low.

As a result profit from operations was down to US$1,16 million from US$1,39 million while finance costs were contained.

"We managed to bring down finance costs to US$555 000 from US$676 000, because of better working capital and borrowing management," Macklin said.

The company currently has 15 branches, 7 of which are in Harare. New branches were opened on Harare Street in Harare, Gweru, Chinhoyi and the Victoria Falls while some branches are being expanded.

In outlook, they see turnover growth coming from private construction projects as people build new homes or renovate existing ones.

There is also a strategic thrust to move into middle and low income segments which appear to have greater spending power, as a way to broaden customer base.

Non- retail sales to industry, contractors, mining as well as agriculture remain important to the business and will also be prioritized. Currently the revenue split is 50-50 between retail and non-retail sales.

Pretax profit came in at US$603 000 from US$711 000 while net profit was also lower than prior year at US$466 000 from US$535 000 with Macklin commenting that the outturn was not "as good as we would want but we are not embarrassed by that given the circumstances."

Stocks increased to US$9,28 million from US$7,75 million.

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