Powerspeed rides residential boom, revenue up 24pc

Powerspeed Electrical Limited says the strong activity in residential property development has created strong demand for building materials, boosting the group’s earnings.

The residential property market has remained strong despite the economic headwinds as demand in urban centres continue to soar. Increased interest from the diaspora market further contributes to the already strong demand and activity within this segment.

Aware of this, Powerspeed has put in place measures to serve this market, also in anticipation of further growth within the segment.

“Strong remittance flow from the diaspora are fueling a surge in residential construction nationwide, thereby boosting the demand for building materials,” said company secretary Martin Gurira in a statement accompanying the Group’s results for the half year to March 31, 2024.

“We have significantly enhanced our capacity to serve this market segment and anticipate further growth from this demographic,” added Mr Gurira.

As part of capacity enhancing initiatives, Powerspeed has been on a branch network expansion rollout program that has seen the group open its 23rd Electrosales Hardware branch at Madokero Mall in May this year.

Meanwhile, revenue for the half year to March 31, 2024 rose 24 percent to US$58,2 million compared to US$46,8 million recorded during the same period in the prior year.

Concurrently, gross profit jumped 44 percent to US$14,2 million from US$9,8 million. Operating expenses witnessed a rise from US$7,9 million to US9,9 million, resulting in an operating profit of US$4,2 million, a significant improvement, as it more than doubled from the previous US$2 million. Profit after tax also grew, moving from US$1,2 million to US$2,9 million.

The period under review marked a notable increase in shareholder equity, climbing from US$40,6 million to US$49,1 million.

The half-year did not see new branch openings or relocations for Electrosales Hardware.

“Instead, we concentrated on enhancing branch content, achieving substantial improvements in merchandising, focused marketing efforts and product displays.

“Our commitment to ensuring maximum product availability and expanding our product range has led to an increase in sales volume compared to the previous year,” said Mr Gurira.

However, Mr Gurira highlighted that the market size remains unchanged, with significant competitive pressure on pricing.

“The growing consumer preference for more affordable, albeit lower quality products, is compressing our margins. This challenge is further intensified by the expansion of informal trade within our sector,” he said.

Going forward, the environment is expected to remain challenging in the short term. The increasing informalisation of the economy puts pressure on the formal businesses.

“The increasing regulatory burden, complexity, and escalating costs of conducting business in Zimbabwe are gradually eroding the formal business sector.

“In contrast, the informal sector is largely exempt from these challenges, contributing to the economy’s informalization – a trend that poses a continuous threat to our business and other formal enterprises,” said Mr Gurira.

Despite these challenges, management remains upbeat about achieving sustained growth in the future.

In light of the prevailing uncertainties confronting businesses in Zimbabwe, the board has deemed it wise to refrain from declaring an interim dividend for the half-year period.-eusinessweekly