Powerspeed confident about Zim economy, profitability

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.-The Herald