OK Zimbabwe revenue surges

OK Zimbabwe Limited says revenue for the first quarter to June 30 2012 increased 31 percent to US$117 million from US$89 million recorded during the corresponding period last year.

Chief executive officer Mr Willard Zireva told the company’s Annual General Meeting last Friday that OK Mart contributed 15 percent to total group revenue.

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OK Mart has continued with meaningful impact on market coverage and has a high mark-up operation adding significantly to margins.

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During the period under review, operating income grew 49 percent ahead of revenue growth.

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Mr Zireva said his company would continue carrying out controls on shrinkage and maintain the improved performance.

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He, however, added that poor performance of the agricultural sector, mainly poor cotton marketing, impacted negatively on sales during the period under review.

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“The bad agricultural season characterised by below expected maize and tobacco output and revenues, and the poor performance on the cotton market has impacted sales in the last quarter,” said Mr Zireva.

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Mr Zireva said slowed economic growth had a negative impact on spending patterns of customers’ disposable income will remain low.

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Zimbabwe’s economy is expected to grow by about 5,6 percent this year driven by mining. Agriculture is expected to register negative growth due to poor seasons.

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The importation of products is expected to continue while local manufacturers battle to increase production.

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According to the Confederation of Zimbabwe Industries, capacity utilisation is around 60 percent with most companies in the manufacturing sector operating below 30 percent.

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The retail sector is under siege from cheap imports flooding the market.

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However, Mr Zireva said the group was now achieving better sourcing and a change in the merchandise mix to higher margin products.

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Last year most of the products sold were imported, as the local manufacturing base was yet to recover sufficiently to satisfy demand. Some products were subject to quota restrictions but this did not hinder supply as the requisite import permits were secured.

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Mr Zireva said the group had identified five shops for development and the current refurbishment exercise was ongoing.

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Renovations at Bon Marche Avondale are now complete and OK Marimba is expected to reopen mid next month while new shops in Hwange and Victoria Falls would open before the end of the year.

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In the year to March this year, the group reported a 140 percent growth in the bottom-line profit to US$10,3 million after a 60 percent sales growth to US$412,6 million.