The trading environment in the first half of the financial period was characterised by exchange rate volatility resulting in the resurgence of hyperinflation. Challenges faced by OK Zimbabwe include difficulties in product pricing due to run-away inflation and unfavourable trading terms from suppliers. Some manufacturers in the period also prioritised supply into channels offering hard currency straining supply for formal retailers. Contractionary measures implemented by the Reserve Bank affected aggregate demand for goods and services by consumers and as a result, volumes fell from a marginal gain of 1% in the first quarter of the company’s financial year to an aggregate decrease of 8.23% to 1H23. Re-pricing of interest rates also resulted in a significant increase in interest burden for the company which currently had increased leverage due to ongoing capital expenditure campaigns. Whilst no new stores were opened within the period, the group invested in face lifts on existing stores to improve competitiveness within the market. Margins for OK Zimbabwe within the period registered lower due to a spike in operating costs. EBITDA margin for 1H23 decreased from 8% at the start of the period to 6.5% whilst Net Margins eased from 3.9% to 2.3%. OCF/EBITDA closed the period at 24.3%. OK Zimbabwe re-iterated the adverse effect of the IMTT tax on its business with effective tax rate at the end of the period standing at 38%. Nevertheless, the company remained in a profitable position to 1H23 and subsequently declared a dividend of USc0.13 payable on or about the 20th of January. At current levels, this translates to a dividend yield of 2.81%.
