Powerspeed confident of the future

Published: 13 December 2013

Powerspeed Electrical Managing Director Hilton Macklin told an analysts briefing yesterday that the Group has transformed itself into a supplier of general hardware and is already seeing benefits of that strategy despite deteriorating macro-economic fundamentals.

"We are no longer just an electrical distributor but a supplier of hardware in the broadest sense and we're second to none in retail hardware," he said on his opening remarks.

He acknowledged that the past year was "extremely" difficult with low business confidence, political uncertainty due to elections, reduced spending and rising expenses.

For Powerspeed, 2013 was a year of further development highlighted by branch roll-out, upgrading of existing branches and expansion of product ranges in the shops.

Business focus was also changed in preference to retail sales. Macklin said they increased retail market share but have not abandoned the non-retail operations.

Commenting on the financials he said turnover was down slightly to $28.6 million from $29.2 million because of loss of industrial and credit sales.

Gross profit went up to $8.69 million from $8.2 million, with margin up to 30.4% from 28%, primarily because of the move from industrial to retail sales which have better margins.

Margins are increasing not through putting prices up but by pushing costs down. Powerspeed is now doing more global sourcing of key product lines directly from manufacturers. Macklin also said they are co-operating with a number of other traders in South Africa to achieve enhanced collective buying power while "good credit lines out of SA are helping us to accelerate our trading."

The company currently has 15 branches, 7 of which are in Harare. Retail space is estimated at 5000 sqm and there are plans to expand it further. New branches were opened on Harare Street in Harare, Gweru, Chinhoyi and the Victoria Falls while some branches are being expanded.

In outlook, they see turnover growth coming from private construction projects as people build new homes or renovate existing ones.

There is a strategic thrust to move into middle and low income segments which appear to have greater spending power, as a way to broaden customer base.

Non- retail sales to industry, contractors, mining as well as agriculture remain important to the business and will also be prioritized. Currently the revenue split is 50-50 between retail and non-retail sales.

Despite a worsening economic environment Powerspeed experienced good trading performance during the last 4 months as a result of changes in business structure and strategy.

"We are not at all pessimistic about our situation barring unforeseen negative policy changes," he said.

- zfn

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