Pick n Pay's Zim rival raises revenue

FMCG SUPPLIER NEWS

Fin24.com - Jun 14th, 09:05

Harare – Zimbabwe’s leading grocer OK Zimbabwe, whose revenues for the year to March 31 surged 16.3% to US$479.6m, is planning to open two new stores and modernise five others during the current year. 

Harare – Zimbabwe’s leading grocer OK Zimbabwe, whose revenues for the year to March 31 surged 16.3% to US$479.6m, is planning to open two new stores and modernise five others during the current year.

OK Zimbabwe directly competes with TM Supermarkets, in which SA grocer Pick n Pay Holdings [JSE:PWK] has a 49% stake. The Zimbabwean retail space is becoming increasingly competitive, with the other major players being Spar franchise operators.

“Two more new branches are planned for the calendar year. Refurbishment work is planned for (five other branches across the country),” said the company on Thursday.

It also reported that revenues for the year to end-March had risen 16.3% from the previous year’s revenue position of $412.6m. It said after tax profits had grown by 20.1% to $12.4m, although overheads also rose to $65.2m.

“The increase in overheads was mainly a result of increases in employee benefits as more employees were engaged.”

As a result of the stronger revenue and after tax profit position, OK Zimbabwe has declared a 0.40 cents dividend for the second half, taking its dividend for the year to 0.60c per share.

The store refurbishments undertaken during the year drove capital expenditure to $12.1m from the previous year’s $11.5m.

The group said the cost of borrowing increased to $0.8m from $0.5m in the prior year as it accessed a convertible loan facility from Investec Africa Frontier Private Equity Fund and other bank facilities.

Zimbabwean retailers are under increased pressure from the Buy Zimbabwe lobby group to procure most of their stock from local suppliers.

Reports say the country is planning laws to force all companies, including retailers, to procure 50% from local producers.

However, there have been concerns over the capacity of local suppliers to meet demand as local manufacturing and industry capacity continues to be bogged down by problems such as expensive capital and erratic power supplies.From Fin24.com