Powerspeed Electrical Limited’s profit after tax jumped 140 percent to $1,091 million from $0,454 million achieved last year on improvements in volume and revenue. Total revenue rose 30 percent to $53,9 million from $41 million achieved in the prior year while gross margins rose at a slower rate to $13,3 million from $12 million due to increased sales of lower margins locally manufactured building materials.
During the period under review, finance costs for the year fell marginally to $845 000 from $861 000 resulting in a 162 percent increase in profit before tax to $1,5 million.
Managing director Hilton Macklin told analysts at the group’s financial results presentation that the operating environment has been challenging mainly due to foreign currency shortages which resulted in inability to meet foreign obligations.
“The year under review has been very challenging. Apart from the foreign currency challenges, there have been some trade barriers, import licenses, punitive duties as well as chaos and delays at the Beitbridge border post,” he said.
Despite the volatile operating environment, Macklin said the group implemented survival strategies such as maintain product development and availability to offset shortages on the market as well as shift product range.
Macklin indicated the major strategy for the firm in the year was to maintain good stock availability of key product lines. As a result, the erratic supply lines resulted in a 30 percent increase in inventory and borrowings.
“We have been working hard on supply lines, this has been important as well as minimising foreign liabilities,” said Macklin.
The group also expanded its branch network. However, there were no new branches added but, increased space.
In line with this, the Victoria Falls branch increased space to 390 from 141 square metres while Avondale and Gweru branches increased retail space to 236 from 82 square metres and 694 from 225 square metres respectively.
The group is also expecting to open Pomona branch today which will increase the group’s total retail space by 1 800 square metres as it moves to enhance efficiency, accessibility and consolidate its market base.
Powerspeed says the group will continue to maximize on existing market share while it increases trade in locally manufactured products.
The group will also take advantage of the demand for building materials market, which is “relatively recession proof” and continues albeit economic challenges.
The group did not declare a dividend due to high borrowings and continued demand for financing of stock.