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Equities outperform inflation rate


Zim firms circumnavigate Covid pandemic through trying times



COMPANIES listed on the Zimbabwe Stock Exchange (ZSE), which hold sway across the vast swathe of the economy and are strategic, are buoyant about the outlook as they adapt to the devastating Covid-19 environment after resumption of major economic activities.


 Zimbabwe took its first lockdown measures in March 2020 after the virulent coronavirus ravaged the global community, disrupting normal economic activities and social order amid a wave of infections and fatalities.

 Lockdowns were imposed to curb infections and deaths after three Covid-19 waves hit the country. The third-wave lockdown, the last major one to hit the country, has been relaxed after a concerted effort to vaccinate the population, the majority of whom have been hesitant to get the jabs due to conspiracy theories surrounding the inoculation and lack of access to inoculation.

In a trading update, Axia Corporation, a retail and distribution sector operator which deals in household goods and appliances, automotive goods and distribution of fast-moving consumer goods, said the first two months of the first quarter to 30 September 2021 had been characterised by Covid-19 Level Four lockdown measures, which were accompanied by “a concomitant reduction in trading hours”.

“Despite this, the group’s retail operations registered good volume growth,” the company said, forecasting an improved performance based on execution of expansion opportunities.

Tobacco giant BAT said the trading environment for the nine months ended 30 September 2021 showed an improvement driven by the relaxation of the Covid-19 lockdown restrictions.

The company had delivered an overall volume growth of 32% over the same period the previous year, mainly attributable to increased consumer demand, increased export of cut rag tobacco and the easing of the Covid-19 lockdown restrictions, reported company chairman Lovemore Manatsa.

He said the outlook was promising, with the national economy forecast “to recover in the context of a good agricultural season, adaptation to Covid-19 induced limitations, and continuation of fiscal and monetary policy reforms”.

“The company remains committed and confident that our business strategies will deliver value growth for our shareholders,” Manatsa said.

In its trading update, hospitality and tourism group RTG, which staged a spectacular turnaround after a spell in technical insolvency, said the Covid-19 pandemic had impacted its performance for the period to 30 September 2021, although it remained in a strong trading position despite business disruptions caused by the pandemic.

“We are confident that the impact of the Covid-19 pandemic and the concomitant lockdown during the remaining part of the year will not have a material negative impact on the group’s financial performance for the year ending 31 December 2021,” Tapiwa Mari, the company secretary, said.

This week, the National Social Security Authority was reported to have upped its stake in the company to 91.5%, a clear vote of confidence in the group’s future and its management.

Border Timbers’ judicial manager Peter Bailey last month said the economic conditions during the financial year to 30 June 2021 had been “slowed down by partially relaxed Covid19-induced restrictions to gatherings, travel, and business trading hours”.

Regional countries had relaxed their lockdowns in response to the subsiding Covid-19 infection rates, which had a positive impact on the export business.

“The reassuring recovery in the Zimbabwe economy, mainly attributable to receding inflation and a relatively stable exchange rate, created a better trading environment which is expected to continue as the government continue to implement economic reforms,” he said.

Bailey, however, said that the impact of Covid-19 on future business operations remained uncertain, but management was quite optimistic that the efforts by the government to vaccinate the population will go a long way in ensuring that the economy rebounds and economic activity normalise. CFI, which recently bounced back from prolonged suspension from the bourse, said in its recent trading update for the third quarter to 30 June 2021, that the environment had been heavily impacted by the Covid-19 pandemic, with a spike in new infections from mid-May 2021.

“While the Covid-19 pandemic is expected to remain ongoing, the group expects an improved business outturn overall for FY2021 (full-year 2021), due to the implementation of the more flexible lockdown measures compared to prior year,” CFI said.

The group is expected to publish its financial results for the full year before year end. The pandemic had resulted in delays at Cassava Smartech Zimbabwe in the publication of its financial results. This had been accompanied by the need to resolve certain technical issues, the company said. However, its businesses had experienced phenomenal growth.

Beverage manufacturer Delta Corporation said Covid-19 mitigation measures implemented by the government, which included lockdowns, restrictions on travel and social gatherings, had limited the sale or consumption of alcoholic beverages.

 However, aggregate demand for its products had remained firm, despite the impact of Covid-19. Demand had been driven by a successful 2021 agricultural season, increased mining output and firmer commodity prices and spending on infrastructure projects.

Board chairman Sternford Moyo said: “The company will continue to review its responses to the Covid-19 pandemic based on the best available medical and safety advice with a focus to avoid or reduce transmissions of the disease through its activities. The roll out of vaccines has reduced the levels of infections and mortality rates and enabled some countries to return to normal levels of social and economic activity. There remains a risk of the resurgence of more virulent strains of the virus which would necessitate the re-imposition of lockdowns. There are many uncertainties that make it difficult to fully estimate the full impact of the Covid-19 pandemic on the financial health of the company and group entities.”

He said the group had recorded tremendous success in the vaccination of employees. This, he noted, “bodes well in ensuring that the business continues to operate in a safe environment”.

“The Zimbabwean operating environment is expected to remain complex as the country begins to focus on the 2023 general elections in the circumstance of difficult economic policy choices. This may be further complicated by the Covid-19 pandemic which remains a factor into the short-term,” Moyo said.

 Clothing retailer Edgars Stores had taken a knock from the impact of lockdowns, although all its businesses experienced growth during the quarter to 10 October 2021 after the introduction of lockdowns following the heightened third-wave infections in June. This had curtailed foot traffic into stores during the trading quarter to 10 October 2021.

This, reported chief executive officer Tjeludo Ndlovu, led to lost sales, productive time and pressure to settle fixed operating costs including Covid-19-related expenses for the group.

“Consumer confidence and spending was significantly depressed, resulting in year-to-date turnover falling below forecast by the end of September 2021,” Ndlovu said.

 “Given the uncertainties around Covid-19, we are taking mitigating steps to protect the group’s operations. This includes empowering staff members to work from home and maintaining World Health Organisation protocols enacted at the height of the pandemic to ensure safety of employees and customers,” she said.

“As at end of September 2021 over 70% of our staff members had been fully vaccinated. The pandemic has had a significant impact on the group’s performance in the current period, most notably on revenue generation, profit margins, administration efficiencies and the merchandise value chain.”

About the outlook, Ndlovu said: “Uncertainty caused by the pandemic is likely to continue due to emerging new variants of the virus and vaccine efficacy challenges. We are taking steps to exercise rigorous management of inventory levels, closely monitor all aspects of the trade receivables portfolio and optimising our funding mix to meet the needs of the business.”

Packaging group NamPak Zimbabwe said it continued to operate as an essential industry during lockdowns. However, group managing director John Paton Van Gend said resurgence of Covid-19 infections brought many uncertainties that made it difficult to estimate the full financial impact on the group’s financial results. Nampak’s full year ended in September, and the company should publish its financials before the end of December.

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