Powerspeed’s trading volumes and profitability remained quite good in the third quarter ending 30 June 2022 despite the business feeling the inflation hit.
While the improvement in exchange rate stability has been encouraging, market watchers say policy changes and inflationary pressure on disposable income will continue to dent business confidence in the medium term.
Like any other business, the ability to pass on the full cost increase to the consumer is hampered by declining disposable incomes.
“Inflationary pressures have pushed up the real cost of basic household expenses, which means reduced disposable income and therefore less expenditure on hardware products, effectively shrinking the potential market,” the company said in a trading update.
“This has increased competitive pressures as we all fight for market share and it inevitably means shrinking margins.”
According to the statement, operations continued steadily throughout the quarter under review and profitable trade by the group contributed to a 6.95% increase in shareholder funds.
On the other hand, the company said, the lack of locally produced goods, including cement and cable shortages, among others, has hurt the business.
“Despite all of the difficulties highlighted above, trading volumes remained relatively strong and profitability was steady,” it said.
In the outlook, the company said it will keep up its multidimensional approach to the more competitive climate by growing its branch base, targeting new market niches and purchasing more products directly from the world’s top producers, wherever they may be – Harare