Powerspeed confident about Zim economy, profitability

Enacy Mapakame
Business Reporter

Powerspeed Electrical, a Zimbabwe Stock Exchange (ZSE) listed electrical, hard and building products supplier, is banking on the projected positive economic performance for 2023, which is expected to positively impact businesses across all key sectors.

Treasury has projected that the economy will grow by 3,8 percent this year, driven by increased production in mining, which is expected to grow to a US$12 billion annual revenue sector by the end of this year.

Agriculture is also expected to make a significant contribution to the anticipated growth target this year on account of increased production on the back of the above-normal to normal rainfall projections this farming season.

The anticipated growth in these and other key sectors of the economy is expected to boost consumer spending hence benefit businesses.

“We are confident that the economic future of Zimbabwe is positive, given the anticipated investment in mining, steel production and agriculture amongst others,” said Powerspeed company secretary Martin Gurira in a trading update for the first quarter.

“As a result, we are very optimistic about our prospects for the future,” he said.

During the first quarter to December 31, 2022, trading recovered compared to the previous quarter, which had depressed performance.

As such, Mr Gurira said, the group traded profitably resulting in an 8,7 percent growth in shareholders’ funds during the quarter.

However, the trading environment during the period remained challenging due to inflationary pressures and currency volatility which weighed on businesses across sectors.

“Inflationary pressures continued to push up the real costs of basic household expenses resulting in reduced disposable income and therefore less expenditure generally, including hardware products effectively shrinking the potential market.

“The resultant shrinking market has increased competitive pressures as we all fight for our share and inevitably means shrinking margins. Controls limiting pricing ratios between Zimbabwe and US dollar continues to make it expensive for customers with US dollar to purchase from formal retailers such as ourselves.

“This is a further incentive, which is driving business from formal to informal trade, this is having a negative effect on all formal retailers, and we are no exception,” said Mr Gurira.

The business was also affected by shortages in locally made products, in particular cables. Despite the difficulties, trading volumes were up on prior year and profitability was steady.

During the quarter under review, the group opened its newest and biggest branch in Avondale in Harare.

Mr Gurira said: “The throughput there has been pleasing.”

“As always, we will continue to pursue new markets, expand our branch footprint, and develop our sourcing of products directly from the best manufacturers globally.”

The group has earlier also indicated various housing and other construction projects are expected to lift demand for its products.

Powerspeed is one of the country’s leading retailers of materials for construction through its Electrosales Hardware, whose branches are all over the country.

Demand also comes from refurbishments of existing structures across segments.

“In spite of all we face in the business every day; we continue to strive for excellence in everything we do. We believe that the drive for sustained improvement will enable us to maintain our position as the pre-eminent hardware supplier in Zimbabwe.

“There is a national culture of investing in housing development or home improvement, which culture spurs demand for our products and services. We strongly support this culture, by offering a broad range of home improvement products, excellent value for money,” said chairman Dr Simba Makoni in a performance update for the year to September 30, 2022.