BY FIDELITY MHLANGA
LISTED supplier of electrical products and service provider, Powerspeed has expressed concern over Zimbabwe’s economic prospects, describing it as “uncertain like never before”.
The country is experiencing multifaceted economic problems punctuated by runaway inflation, eroded earnings, currency volatility and policy inconsistences which it said were an albatross on business.
“Zimbabwe has been through periods of extreme uncertainty in the past. However, we are possibly facing even greater uncertainties than ever before, which makes it extremely difficult to predict the future performance of the Group,” said Powerspeed company secretary Martin Gurira in a statement accompanying the firm’s trading update for the quarter to June, 2020
“Having said that, we will continue to focus on growth of shareholder value, with the confidence that we have the resources to survive short term business disruptions such as those that we had in April of this year.”
The firm said the economic difficulties facing Zimbabwe had been exacerbated by the COVID-19 pandemic, but now a shrinking economy which was already expected would now be even greater than anticipated.
This will have a negative impact on almost all businesses in Zimbabwe as consumer spending declines
“The trading environment remains extremely difficult with regulation changes without notice or consideration for the consequences. Travel restrictions have made it difficult for staff to travel to work and in many instances, the group has had to provide contracted transport at a substantial additional cost. Despite these challenges we have been able to keep most operations operational to maintain customer service,” Gurira said.
But volumes during the quarter have been erratic, weighed down by the national shutdown in April which reduced throughput to almost zero for the greater part of the month.
Volumes have recovered, but there have been substantial changes in product mix.
“Overall, volumes were marginally higher than the same quarter last year because of increased market share in a number of product groups. While revenue rose substantially both in historical and inflation-adjusted terms, profitability remains difficult to assess because of rapidly changing exchange rates and distorted indices,” the company said.
During the quarter, revenue grew to $1 billion from $882 million.
“Margins continue to be under pressure while expenses are rising with inflation and devaluation. Based on assessment of the balance sheet, we believe that we are continuing to build shareholder value in real terms,” Gurira said.