Powerspeed Electrical Group Quarterly Results: Third Quarter ending 30 June 2020

COMMENTARY

Trading Environment
The economic difficulties facing Zimbabwe have been exacerbated by the COVID-19 pandemic which has engulfed the whole world. A shrinking economy was already expected and will now be even greater than anticipated. This will have a negative impact on almost all businesses in Zimbabwe as consumer spending declines further.

The trading environment remains extremely difficult with regulation changes without notice or consideration for the consequences. Travel restrictions have made it difficult for staff to travel to work and in many instances, the Group has had to provide contracted transport at a substantial additional cost. Despite these challenges we have been able to keep most operations operational to maintain customer service.

Volume performance and profitability
Volume throughput during the quarter has been erratic, obviously the national shutdown in April reduced throughput to almost zero for the greater part of the month. Subsequently, volumes have recovered, however there have been substantial changes in product mix. Overally, volumes were marginally higher than the same quarter last year because of increased market share in a number of product groups.

While revenue rose substantially both in historical and inflation adjusted terms, profitability remains difficult to assess because of rapidly changing exchange rates and distorted indices. Margins continue to be under pressure while expenses are rising with inflation and devaluation. Based on assessment of the balance sheet, we believe that we are continuing to build shareholder value in real terms.

Outlook
Zimbabwe has been through periods of extreme uncertainty in the past, however, we are possibly facing even greater uncertainties than ever before, which makes it extremely difficult to predict the future performance of the Group. Having said that, we will continue to focus on growth of shareholder value, with the confidence that we have the resources to survive short term business disruptions such as those that we had in April of this year.

Price Indices used were obtained from the Zimbabwe Statistical Office

By Order of the Board
M. S. Gurira

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Powerspeed quarterly results: Third quarter ending 30 June 2020.pdf