Macklin told shareholders that the company’s subdued performance was largely due to the group’s reluctance to extend credit.
“Performance in December was not as good as expected, while January and February were very slow. We anticipate a difficult year especially in regards to mining related business,” Macklin said.
The bottom line was however above both management’s expectations in the first quarter against last year. This, Macklin said, was a result of good pricing structures and buying strategies. The trading division performed better than expected but the engineering business was a drag, he said.
The group opened a new outlet in Mount Pleasant, which is performing above expectations. He said the company’s Bindura branch had been closed, adding that there was need to review the whole branch network because some of the branches were performing below expectations.
“The Gweru and Bulawayo branches are dead, while the Mutare, Kwekwe, Masvingo as well as the Harare branches are doing well,” he said.
Powerspeed has 24 branches in total, nine of which are outside Harare. The company is one of the leading suppliers of electrical goods and services for domestic, commercial, industrial, mining, construction and agricultural purposes.
In the year to September 2011, the group’s turnover grew 40% to US$26,3 million from US$18 million in 2010.
The group said competitive pressures, combined with low capacity utilisation at its divisions, reduced gross margins to 28,4%.
Management said there was a disproportionate growth in expenses, mainly as a result of general rising costs in the country. Borrowings increased in that same period from US$2,9million to US$3,8m, while the total cost of the borrowings came down from US$741 000 toUS$667 000 due to more favourable terms. The net result of the decrease in the cost of borrowings resulted in a 27% increase in net profit to US$460 000 from US$361 000. — Staff Writer.