OK June results surge by 329%


Conrad Dube

OK Zimbabwe Ltd’s first quarter to June was ahead of forecast with sales increasing by 329% over the same period last year.



l, Helvetica, sans-serif”>Chairman Eric Kahari told shareholders at the second annual general meeting since the demerger from Delta Corporation Ltd that the group’s sales to-date were 44% above budget while margins showed an increase of 1% over the comparative period.


“Margins are in line with targets set for the quarter and product availability has improved since the removal of price controls but some prices are becoming prohibitive for the majority of consumers,” Kahari said.


Expenses have been managed at 260% over the prior year and the operating profit growth was in excess of 600% for the quarter.


“Pressure on expenses will be increasing and management will continue to ensure these are kept below the sales growth,” he said.


Kahari said national salary and wage adjustments should result in increased sales while a number of new branches would be opened during the remaining part of the financial period to March 31 2004.


Chief executive officer Willard Zireva said the annual Grand Challenge, which was held in June, had helped volume sales.


“Annually the Grand Challenge helps push our sales volumes up,” Zireva said.


Volume growth improved due to the availability of more products as suppliers favour the group during the period preceding the Grand Challenge, the company said.


“We had more products than our competitors at the time of the challenge because suppliers seek to identify with the OK Grand Challenge in light of the volumes the annual promotion pushes,” Zireva told an analysts’ briefing on final results to March 31.


The promotion is a major event in Zimbabwe’s promotional calendar featuring horse racing and soccer and creates real value for customers. Significant prizes which include motor vehicles, houses and cash are won every year.


Cash price reductions and discounts on specific products benefit the customer during the promotion, helping the group to push more sales volumes.


In the year to March 31, OK recorded attributable profit of $3,8 billion up 243% on prior year’s $1,1 billion.


Turnover rose 193% to $47,7 billion from $16,3 billion in 2002.


“Although this growth was ahead of average CPI of 160,4% for April 2002 to March 2003, it was largely inflation-driven with the decline in volumes referred to in the half year to September 2002 statement continuing into the second half of the year as disposable incomes continued to be eroded,” the company said.


The growth in attributable earnings at 243% was ahead of average inflation for the year – 160, 4% – and growth in turnover of 193%.


The company said this was due to the ongoing efforts by management to contain costs, aided by the efficiencies accruing from economies deriving from the company’s procurement, promotional, marketing and distribution scale.


The company said it was pushing its own brands including the Pot O’ Gold products whose participation would be increased to 25% from the current 6,2%.


Attributable and headline earnings per share rose to 111 cents and 105 cents respectively, compared to 35 cents for the comparative period last year.


Debtors grew by $1 billion to $3,5 billion while stocks went up by $6 billion reflecting a positive cash position for the company.


OK Zimbabwe declared a final dividend of 43 cents per share bringing the total dividend declared for the year to 55 cents per share compared with 16,2 cents in 2002.


OK Zimbabwe shares closed at $17 on Wednesday gaining 112,5% on the week.