Business / Companies
OK Zimbabwe buoyed by capital injection from Investec
08 Jun 2011 at 04:50hrs | Views
RETAIL giant OK Zimbabwe Limited, buoyed by a fresh capital injection of funds from South Africa's Investec, has posted US$4,3 million in profit for the year ended March 31, 2011.
The Zimbabwe Stock Exchange-listed firm turned over US$257,4 million, representing a 37 percent growth compared with the corresponding period last year.
Group performance showed that the US$5 million loan from Investec gave the supermarket chain a new lease of life with a significant improvement in stocking levels.
It also managed to arrest shrinkage and management introduced higher margin products and general prudent overheads, which resulted in improved profit margins.
OK faces intense competition from other established retailers - Spar, TM and Afrofood - and other smaller retail shops.
The supermarket giant is slowly adjusting to the competition, focusing more on refurbishing its outlets to world standards.
During the period under review, earnings per share increased 153 percent to US0,43c and decided on a US0,21c dividend per share.
Net operating expenses for the group increased from US$13,7 million the previous year to US$19,9 million in the current year. Marketing expenses incurred in the previous year were the main driver of the increases.
Chief executive Mr Willard Zireva was bullish about the future of the group, targeting a capital expenditure of about US$60 million in the next financial year. Capital expenditure during 2010 was US$9,4 million, compared with US$1,5 million in 2009.
He said his company performed beyond expectations in April and May this year, operating at 5 percent above targeted budget.
Going into the future, Mr Zireva said OK Zimbabwe would soon be generating about US$25 million a month, representing an upside of about 45 percent.
But in a statement, chairman Mr David Lake said tight liquidity and undercapitalisation in most companies restricted local manufacturing of goods while low disposable incomes affected consumer spending.
The performance of the company was also affected by the ban on imports of chickens and dairy products during the first half of the year.
OK Zim imports most of its products from South Africa and the appreciation of the rand against the US dollar had an impact on pricing.
"The successful recapitalisation of the company at the start of the financial year enabled the company to embark on a store refurbishment programme," read part of the chairman's statement.
During the period under review, OK Masvingo, which had been destroyed by fire, was rebuilt while OK Kwekwe and Bon Marché Belgravia were refurbished. Another shop was also opened in Chiredzi.
OK Zim also acquired the assets of Makro Zimbabwe, in a deal in which it paid US$400 000 and took over the leases of the two premises in Bulawayo and Harare.
The company said the acquisition would provide the company with an opportunity to grow its business by operating in different market segments.
The purchase consideration was settled by an issue of shares in the company, representing 0,5 percent of the total shares in issue.
OK Zim said they would continue with the refurbishment drive and open new shops countrywide.
The Zimbabwe Stock Exchange-listed firm turned over US$257,4 million, representing a 37 percent growth compared with the corresponding period last year.
Group performance showed that the US$5 million loan from Investec gave the supermarket chain a new lease of life with a significant improvement in stocking levels.
It also managed to arrest shrinkage and management introduced higher margin products and general prudent overheads, which resulted in improved profit margins.
OK faces intense competition from other established retailers - Spar, TM and Afrofood - and other smaller retail shops.
The supermarket giant is slowly adjusting to the competition, focusing more on refurbishing its outlets to world standards.
During the period under review, earnings per share increased 153 percent to US0,43c and decided on a US0,21c dividend per share.
Net operating expenses for the group increased from US$13,7 million the previous year to US$19,9 million in the current year. Marketing expenses incurred in the previous year were the main driver of the increases.
Chief executive Mr Willard Zireva was bullish about the future of the group, targeting a capital expenditure of about US$60 million in the next financial year. Capital expenditure during 2010 was US$9,4 million, compared with US$1,5 million in 2009.
He said his company performed beyond expectations in April and May this year, operating at 5 percent above targeted budget.
But in a statement, chairman Mr David Lake said tight liquidity and undercapitalisation in most companies restricted local manufacturing of goods while low disposable incomes affected consumer spending.
The performance of the company was also affected by the ban on imports of chickens and dairy products during the first half of the year.
OK Zim imports most of its products from South Africa and the appreciation of the rand against the US dollar had an impact on pricing.
"The successful recapitalisation of the company at the start of the financial year enabled the company to embark on a store refurbishment programme," read part of the chairman's statement.
During the period under review, OK Masvingo, which had been destroyed by fire, was rebuilt while OK Kwekwe and Bon Marché Belgravia were refurbished. Another shop was also opened in Chiredzi.
OK Zim also acquired the assets of Makro Zimbabwe, in a deal in which it paid US$400 000 and took over the leases of the two premises in Bulawayo and Harare.
The company said the acquisition would provide the company with an opportunity to grow its business by operating in different market segments.
The purchase consideration was settled by an issue of shares in the company, representing 0,5 percent of the total shares in issue.
OK Zim said they would continue with the refurbishment drive and open new shops countrywide.
Source - OK
