OK Zim suffers volumes drop, Declares US dividend

The country’s biggest retail group, OK Zimbabwe posted a 7,7 percent volume drop for the year ended 31 March over the comparative period owing to depressed consumer spending power and local currency liquidity shortages and declared a final dividend of 0,02 US cents per share.

Revenue for the year grew by 33,3 percent to $311,3 billion from $233,6 billion in the comparative period.

In historical cost terms, revenue grew by 327,6 percent to $260,5 billion from $60,9 billion.

The group chairman, Mr Herbert Nkala attributed the drop in volume to local currency liquidity shortages and depressed consumer spending power.

Mr Herbert Nkala

He said the informal sector continued to expand at the expense of the formal retail sector as a result of exchange rate distortions in the market.

Profit after tax decreased by 36,0 percent to $5,2 billion from $8,1 billion registered last year while in historical cost terms, the profit after tax increased by 111,7 percent to $5,1 billion compared to $2,4 billion last year.

Mr Nkala noted that the profit performance was impacted by the increase in operating costs arising from increased usage of generator fuel due to acute power outages, inflation pressures embedded in forward pricing by market players, as well as exchange rate-induced cost increments on labour, cleaning and security costs.

However, he said the group has taken measures to reduce and contain costs to improve its profitability.

The retail Group utilised borrowings to fund its strategic growth initiatives in accordance with its medium to short-term growth plans.

Mr Nkala said the increase in the interest rates resulted in the net finance charges growing by 99,7 percent.

In the period under review, capital expenditure was $6,1 billion down from $8,9 billion in the prior year.

The chairman said most of the capital expenditure was channelled towards store refurbishments. In addition, there was an acquisition of a subsidiary amounting to $3.7 billion.

During the period under review, the Group successfully concluded the strategic acquisition of the Food Lover’s Market business in Borrowdale, Avondale and Bulawayo’s Bradfield shopping centre after receiving the necessary regulatory approvals.

Mr Nkala said the acquisition, which comes with a Territorial License Agreement for the Zimbabwean territory, will bolster the Group’s strategic thrust to expand its footprint in the premium segment of the market.

“This will see the Group refreshing the existing stores and expanding the brand representation in the territory. The addition of the Food Lover’s Market franchise arrangement will create further supply chain and logistics optimisation that will benefit the entire Group with premium product offering.”-chronicle