Owners of electrical product retail outlet, Powerspeed Electrical Limited has raised concern on competition from the informal sector in a Reviewed Abridged Interim Consolidated Financial Statements for the six months ended 31 March 2020.
Pwerspeed owns Electrosales Hardware and three engineering company including Airflo, Relmo and ELS.
“We have, for some time, been concerned about competition from the informal sector, which has been thriving in Zimbabwe,” the company says.
“Enforcement of Covid-19 hygiene regulations has compelled authorities to keep informal markets closed, and demolish structures in some of those markets. We shall be monitoring the impact of these actions, with a view to measuring the scale of competition from the informal sector.”
The company that is concerned with competition from the informal sector, however, reported its revenue climbing from $505m to $718m, while gross margin rose from $124m to $156m.
“Monetary gain, combined with a reduction in finance costs, lifted profit before tax from $29m to $177m, giving profit after tax of $167m; up from $21m and EPS increased from 5.63c to 41.95c.”
“Simultaneously and intentionally, there was significant growth in the balance sheet value, with shareholder equity rising 14.5%, from $581m to $665m.”
The company’s financial statements reports of continuous improvement of the Electrosales Hardware brand and outlets and the Engineering Division delivering pleasing results in the period under review.
Powerspeed Electrical Limited also reveals that operations completely closed for a good part of the month of April suffering substantial losses, as a result.
“We have subsequently re-opened, and although volumes have not recovered to where they were before the shutdown, they have bounced back surprisingly well,” the company says.
“Supply lines have been disrupted, but are steadily re-opening and recovering. In the meantime, our substantial buffer stocks have been able to satisfy the reinstated demand. It is still too early to be definitive, but it does appear that volumes have already recovered sufficiently to return us to profitability.”
The informal sector in Zimbabwe has become the largest source of income with formal jobs continuing in scarcity
