Corporate results reflect growing economy

FINANCIAL results released by three of the country’s biggest corporates, Delta Corporation, Econet Wireless Zimbabwe and OK Zimbabwe, is a clear testimony that despite the headwinds facing the country, strong brands and business models can still flourish and create value for investors in Zimbabwe.

Zimbabwe has been going through crippling cash shortages that have seen some businesses dithering on the brink of collapse.

But strong brands have not only managed to survive, have even registered tremendous growth.

Zimbabwe Stock Exchange listed entity OK Zimbabwe is one such a company.

This week, the company presented its half year financial results to September 30, 2018.

Responding to analysts who were seeking to understand whether the company was experiencing real growth given the prevailing economic headwinds, the retail giant’s chief executive officer Mr Alex Siyavora said his company had experienced real growth of approximately 10 percent.

OK Zimbabwe’s revenue for the six months under review grew by 23,2 percent to US$330,1 million while profit after tax increased by 66,3 percent to US$8,4 million.

“While there was inflation, consumption levels increased, and some businesses experienced real growth, and I think we will show in our numbers an element of real growth,” said Mr Siyavora.

“The growth rate is very real, our measure of inflation at the point of procurement, which goes through in sales, is 12,1 average for the period. So it (inflation) could be say 23,2 percent (revenue growth) minus 12,1 percent (internal inflation) and the difference amounts to real growth,” Mr Siyavora said.

He said the retailer had also seen physical movement of volumes in its shops more than what was moved for the comparative prior year. The story was the same for beverages giant Delta Corporation after sales of its lager beers eclipsed levels last seen back in 2013.

Group chief executive officer, Mr Pearson Gowero said lager beer volumes out turn of 1,040 million litres was the highest since 2013 when volumes reached 1,027 million litres. Total revenue increased by 37 percent to US$341 million in spite of the company not increasing its prices.

Further, the company achieved good results despite the foreign currency shortages in importing packaging material and other key raw materials.

“Consumer demand has been firm due to improved economic activity in mining, agriculture and election related spending.

However, outages of important raw materials arising from limited hard currency led to a constrained capacity in lager and Chibuku Super beer,” he said.

Financial director Mr Matts Valela weighed in saying it is key that the company had continued to deliver at constant prices in the last five years, and that volumes growth reflects a positive change in the sales mix.

Mr Gowero stressed that his company had not scaled down operations in any way and was doing all it can to address product supply challenges in the context of the emerging trading environment.

The Group is considering exploring critical investment and regional growth opportunities. Also to report an impressive set of results was telecoms giant Econet Wireless Zimbabwe after revenue went up by 70 percent to US$600 million dollars in half-year revenue to 31 August 2018, up from US$353 million in the same period last year.

While growth for the Fintech businesses such as EcoCash and Steward Bank was largely expected as most transactions are now going through electronic means, the company still managed to record significant business in its telco related businesses.

Revenue from data, voice and SMS grew by 40 percent to US$353 million, up from US$252 million in results that management credited to its TMT (telecom, media and technology) model.

“Traditional telco products bucked the industry trend and all showed double digit growth, with data revenue contribution growing by 57 percent to US$98,3 million, and the voice and SMS revenue going up by 34 percent to US$218 million.

Analysts said the strong set of results seen this week demonstrates the evident potential and growth prospects in the local economy.