Powerspeed sees increase in business and profitabi...

Powerspeed sees increase in business and profitability, red flags informal sector

Audrey Galawu

Assistant Editor

While one of the country’s biggest hardware retailer has grown its business and profits, it has said the growing informal sector in the country is increasing regulatory burden and increasing the costs of conducting business.

In its report for the quarter ended March 31, 2024, Powerspeed Electrical group said the increasing complexity, and escalating costs of operating business in Zimbabwe are gradually eroding the formal business sector.

“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.

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

The group’s revenue for the quarter saw an increase from US$46.8 million to US$58.2 million.

Concurrently, gross profit rose from US$9.8 million to US$14.2 million.

Operating expenses witnessed a rise from US$7.9 million to US$9.9 million, resulting in an operating profit of US$4.2 million, a significant improvement from the previous US$2.0 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 Electrosales Hardware division did not see new branch openings or relocations for the half year.

“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. However, the market size remains unchanged, and we face significant competitive pressure on pricing.”