One of Zimbabwe’s biggest retail chains, OK Zimbabwe saw revenues and profits increase in its trading first half of 2016 according to results published today. Revenues increased by 2% to $218 million from $213 million in 2015 and margins were maintained at about 17% which saw after tax profit for the half-year period to 30 September 2016 increase 87.1% to $2,3 million from $1,2 million in 2015. Chief executive Willard Zireva told an analyst briefing late Thursday that despite a worsening macro-economic environment, the market was competitive enough to generate increased revenues and profitability. Mr Zireva said his company currently has a stock buffer of 45 days worth of sales, which places it in a safer position if the supply situation deteriorates further.
OK Zimbabwe Chairman Mr David Lake in his report accompanying the half year results said : ‘…the Group recorded an increase in both revenues and profitability. Gross margins improved due to efficient procurement, while operating costs were managed down to achieve improved profitability. Working capital has improved significantly, reflecting sufficient liquidity in the business to meet the group’s operating requirements.’ In the six months, overheads dropped to $33 million from $34,2 million previously as group wide initiatives to contain costs continued. Capital expenditure for the period was $5,5 million, up from $3,9 million in prior year.
Closed and New Branches
OK Mart opened two new outlets during the six-month period, in Gweru on July 17 and Victoria Falls on September 1. Since the cut-off, it has also rolled-out one more outlet in Houghton Park, Harare and intends to open a Chipinge branch before year end. Two non-performing branches have been closed; iTech centre in Eastlea and OK Herbert Chitepo in Bulawayo.
OK Zimbabwe’s financial situation has been deteriorating since 2013 with the stock price plunging from a high of 12c per share in 2010/11 to the current low of 4.84c. This means investors have lost more than 50% of the value of their shareholding in the business and with the Zimbabwe situation expected to continue until the 2018 elections, at the very least, international investors in OK Zimbabwe are getting frustrated with its returns. There are indications that OK Zimbabwe seems to have fallen out of love with its biggest single investor; Investec Africa of South Africa over the continued falling share price. Speculations are that Investec will divest out of OK Zimbabwe through a single sell of their shares which will most likely see new faces in the boardroom and executive management structures of the company.