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Resilient Zim firms rise to economic challenges

Mar 23 2017 18:30
Malcom Sharara

Harare - Zimbabwean businesses have continued to show their resilience in a tough operating environment, as shown by their results in the ongoing reporting season.

While describing the operating environment as challenging, most companies reported a slight decline in revenue and profitability.

Property-owning and listed entity Pearl Properties said the economy continues to weaken due to liquidity, deflation and declining local competitiveness.

“Fiscal revenues declined during the year across individual, corporate, customs duty and value added tax heads, on the back of low domestic demand, reflecting the worsening performance of key productive sectors,” said the company. 

However, it still managed to recover into a profit position from a loss position during the prior comparative year.

Another listed entity, Edgars Stores Limited, partly owned by Edcon, said depressed demand for clothing impacted on performance in 2016.

The company said “product sourcing challenges due to foreign currency shortages” had resulted in loss of sales for the 52 weeks to January 8 2017.

Production at the company’s factory Carousel was also hindered by late payments for fabric and trims due to the prevailing foreign exchange shortages.

The company, however still managed to report a set of results which showed cash flow from operations increasing by 149.3% to $10.2m.

The story was the same in the insurance sector, where listed entity First Mutual Life Holdings (FMLH) said “the operating environment remained challenging in 2016 characterised by liquidity constraints, shortages of foreign currency and a modest Gross Domestic Product”.

“The property market remained constrained during the year 2016 due to low demand for rental space, increasing voids mainly from voluntary space surrenders and evictions, growing arrear levels and downward rental review requests from tenants,” said FMLH the major shareholder in Pearl Properties.

The company, however, still managed to preserve and create value for shareholders after recording strong growth in overall profit after tax to $9.3m for the year compared to $0.1m in the previous period.

Banking group FBC Holdings said the economy has “continued to show signs of weakness, principally on account of low domestic production across key sectors”.

It added: “The economy remains vulnerable to endogenous and exogenous shocks and this has translated into demand shifts within the group’s product portfolio mix.”

Again, this did not stop it from reporting a compelling set of results, which saw profit before tax increasing by 20% to $25.7m.

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zimbababwe  |  retail  |  africa economy

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