Price freeze kills product supply

PELHAMS results for the interim period ending September 30 showed that the company's operating margins improved from 57% to 62%while operating profit increased 64 931% to Z$96billion, while the pre-tax profit moved up to $64 billion from $116million.

This translated to an attributable profit growth of 43 630% to $45billion and an Earnings Per Share of $52,01 compared to $0,12 for the prior period.

The company’s cash flow improved from $82 million to $41,2billion with cash equivalent earnings per share of $48,38.

The balance sheet improved to $723,9billion from $2,5billion while total shareholders’ equity rose to $527,7billion from $1,8billlion in the comparative period. The company highlighted that the momentum built in the first quarter was diluted by the price control blitz in June.

While this resulted in some products being sold below cost and reduced margins, it had the more devastating effect of killing off product supply so that the 10% volume growth experienced in the first quarter was reduced to 2% at the financial year end.         

The middle to lower market segments have seen disposable income falling resulting in significantly reduced credit in the sales mix which was down to about 6% from just under 20% in the same period.

Credit remains on offer to mop up sales but the book which arises from is so small and the related funding demands are no longer material.

However, the book continues to perform with arrears at 0,84% for the half year compared to 0,81% in the prior year.

Post published in: Economy

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