Tinashe Makichi
HARARE – Powerspeed Electrical posted a 250 percent profit increase to $2 million for the six months to March 31, 2018. This is up from $0,6 million recorded the previous period. The increase is on the back of improved efficiencies.
The retailer recorded a turnover of $37,2 million, which is a 55,3 percent increase from $23,9 million of the previous period.
The company was able to lift its gross margins slightly up to 28,1 percent from 26,3 percent, mainly through improved sourcing. This resulted in a 66,1 percent increase in GDP to $10,5 million.
Operating expenses for the company grew from 37 percent to $7,4 million which was driven by the branch expansion programme. The net result of which was a 180 percent increase in operating profit to $3,32 million from $1,19 million.
Borrowings, however, remained significant sitting at $9,9 million. This pushed finance costs up by 39,6 percent to $556 000.
“However, given our recent investments in property and in inventory to feed the growth in throughput, we believe that this level of borrowings is less concerning than that of previous years,” said Powerspeed managing director Hilton Macklin.
He said Powerspeed is not a manufacturing firm as ordinarily perceived by the market; its primary focus is on electrical, hardware and building retail.
Going forward, the hardware firm is looking at rebranding and converting its primary business to retail.
Macklin said the company has invested about $4,7 million in property over the past two years so that customers can derive more value for money.
“We are looking at building capacity in our centralised distribution centre. This will see us improving our relationship with local manufacturers. We are looking at maximising existing outlets and resizing our undersized branches. We will be driving the expansion of our branch network,” said Macklin.
During the period under review, Powerspeed purchased its Pomona branch building for $2,5 million and, according to Macklin, the destination store experiment has performed well.
The hardware also recently opened a retail store at Borrowdale Village Walk and is said to be generating a considerable amount of revenue.
Macklin said that, going forward, the firm is looking at growing its market share from the current 20 percent to 50 percent.
“As always we are optimistic about the future prospects of the country and opportunities that these will bring for our business. We believe that the promise of free, fair and credible elections this year will assist in normalizing the country’s relations with the rest of the world,” said Macklin.
