…but foreign creditors at ZAR37.3m weigh down outlook
STAFF WRITER
A change in the sales mix and focus on fast moving lines with a higher profit margin saw MedTech Limited, a Zimbabwe Stock Exchange-listed company return to profitability in the half year to June 30, 2018.
Revenue was up 18 percent to $6.02 million from $5.1 million achieved in the comparative half year period. The group managed to lower its cost of goods sold to $2.62 million from $3.58 million last year, resulting in improved GP of 56 percent from 30 percent.
The FMCG segment, which comprises of MedTech Distribution, Smart Retail and Choice Brands, contributed the most to the business, with revenue of $4.99 million and GP at 51 percent. According to the group, Choice Brands is a newly incorporated entity, which will be involved in the distribution and wholesale of fast moving consumer product. Chairman Rose Mazula said that margins had improved due to changes in the sales mix and better re-ordering concentrating on fast moving high profit margin lines.
On the medical segment, revenue was down 37 percent to $279 441 from $446 812 last year. This was due to low stock levels due to foreign suppliers maintaining the stance of cutting lines of credit as a result of the inability by banks to remit foreign payments. But despite the challenges, the segment had seen an improvement in the margin to 33 percent.
Manufacturing had a healthy GP after in spite of the 15 percent decline in revenues. According to Mazula, the segment was affected by changes in consumer spending patterns where consumers shifted to smaller pack sizes while the unit also saw increased competition from smuggled products. The segment however was profitable.
Operating profit grew by a significant 541percent to $2 million from $312 723. The bottomline was at $689 482 from a loss position of $577 016 last year. FMCGs contributed the bulk of the profit.
Going forward, the group said in the short term, there will be continued delays in remitting foreign payments and this would negatively affect ability to service ZAR37.3 million foreign creditors. “This may lead to cuts and resultant stock-outs.”
Mazula said the group would strive to maintain market share although the sharp rise in pricing levels is expected to reduce consumer spending.
The group did not declare a dividend.
