OK Zimbabwe reported a 61% earnings per share (EPS) jump in the first half of the year to September 2018.
CE Alex Siyavora said the retailer’s topline earnings surged 23% in the same period at US$330 million. Net profit stood at US$8,4 million.
“We believe there is real growth there,” Siyavora told analysts in Harare on Wednesday, adding the jump was above internal inflation at 12%.
He said the internal inflation figure was measured at a procurement level.
Siyavora said the company is optimistic the Real Time Gross Settlement (RTGS) will remain in place going into the future, adding the group was still utilising its Kawena remittance platform to pay for some key imports.
He ruled out a possible re-dollarisation of the economy in the near future.
“I don’t think government would want a repeat of 2008 where savings and pensions were decimated. Informed by that, we are going to continue making as much RTGs as we can,” Siyavora said, adding he would wait for the fiscal statement for direction.
He said the group’s suppliers have not yet started demanding payment in forex as yet.
“We use cash to procure and are offering incentives to suppliers. Our suppliers know we don’t generate forex,” Siyavora said.
On whether his company would consider making quarterly dividend payouts given the inflationary pressures in the economy, he said this would depend on the availability of cash.
“If we are generating cash, certainly that can happen. Shareholders would be more concerned with us staying in business. They were concerned whether we would remain operational when the prices increased last month,” Siyavora said.
Ok Zimbabwe doled out a US$6 million dividend in the period, up from US$2,9 million. The group pays out 50% of its net earnings to shareholders.
Siyavora added his group had managed to bring down shrinkage to 1% in the period under review. But overheads rose 18% owing to increased transaction, staff costs, rentals, and bank charges on transaction. Margins remained static in the period under review on prior year at 17,5%. A total US$16,9 million was generated from operations.
He added that while the monetary and fiscal policies of last month triggered a depletion of stocks, manufacturers were releasing product.
“Stocks are improving as manufactures release product again. Supplies declined significantly during the first two weeks of October. With the prevailing supply challenges, we are talking to old suppliers and new one as well,” he said.
Siyavora said focus would be on improving market share position through efficient use of existing capacity.
“Prices will come down as consumers resist high prices,” he said. Ok runs 63 stores in total.