OK reports strong HY performance
BUSINESS REPORTER
OK Zimbabwe Limited, the country’s largest retailer, reported substantial growth in the six months to September 30, 2023 with a 60.38% increase in revenue, amounting to ZWL$727.9bn from ZWL$453.8bn achieved in the prior comparative period, thanks to a cocktail of mitigating measures implemented by management.
Profit for the group jumped 52% to ZWL$21.2bn in the reviewed period against ZWL$13.9bn reported in the previous year.
These surpass the predictions of analysts.
In a statement accompanying the financial results, OK Zimbabwe board chairman, Herbet Nkala, said management implemented a business and volume recovery plan during the period under review.
“Management has put in place a comprehensive business and volume recovery plan whose short and medium term objectives are to restore the business to sustainable growth and profitability,” Nkala said.
According to Nkala, the group used credit facilities to finance its strategic growth initiatives in line with its medium- to short-term growth plans, which caused a 63.86% increase in net finance charges.
Capital expenditure in the period under review grew to ZWL$16.8bn from ZWL$7.4bn with most of the expenditure channelled towards the new Bon Marche Marondera store and a number of new Alowell Pharmacy outlets that are now fully operational in store at selected branches.
However, Nkala, asserted that the company was negatively impacted in some way by the depreciation of the Zimbabwean dollar.
“This rapid depreciation of the local currency caused some sharp price increases which in turn resulted in consumers suffering depressed affordability.
“As a consequence of the exchange rate deterioration , the cost of doing business continued to increase to unsustainable levels. mainly driven by utilities and backup power expenses , transport and delivery , maintenance expenses and labour costs.
“The group incurred significant exchange losses on its foreign dominated liabilities and leases amounting to ZWL$32.4bn which negatively impacted on profitability,” he said.
In order to lessen the impact of exchange losses moving forward, OK Zimbabwe started the process of liquidating forex-denominated liabilities and renegotiating forex-based leases after the reporting period.
The group applauded the recommendation of the Monetary Policy Committee to eliminate the Intermediated Money Transfer Tax (IMTT) on customer card transactions and the 10% margin cap on the in-store exchange rate.
According to Nkala, the measures will remove distortions caused by the unequal exchange rate discrepancies, which should translate into cheaper costs for customers.
He said the group has implemented cost optimisation initiatives across the operations, streamlining processes, renegotiating supplier contracts and implementing efficiency measures to reduce overheads.
