Latest news with #OKZimbabwe
IOL News
06-07-2025
- Business
- IOL News
Zimbabwean consumer sector poised for improvement amid rising costs, tax pressures
OK Zimbabwe, another prominent retailer battling headwinds, is now undertaking a $30mn rights issue to stabilize the company. The retailer has also announced further closures of stores, pointing to a 2025 year that 'remains volatile and fragile, but with a possibility of better performances' by consumer companies. Image: Tawanda Karombo/Independent Newspapers Tawanda Karombo An uplift in volumes has been projected for Zimbabwean consumer companies despite rising cost structures, a volatile policy and monetary environment as well as higher taxation, say analysts at IH Securities. Hippo Valley, Tongaat Hulett's Zimbabwe-listed unit, reported a 44% downturn in revenues to $191.59 million this month although the gross profit for the year to end March rose 2% to $66.87m. Another Zimbabwean consumer company, Star Africa Corporation that also trades in sugar, however, raised revenues by 22% over the same period. Nonetheless, analysts at IH Securities on Friday said in the securities and advisory firm's latest research note on Zimbabwe's consumer sector that they 'anticipate an uplift to volumes for consumer-facing companies this year owing to a likely recovery' in consumer spend. However, this was against the backdrop of 'general cost structures continuing to be on the rise' corresponding to a 'volatile policy environment and the crystallization of costs' in United States dollars. 'On the demand side, private consumption growth, which had slowed down from 4.8% in 2023 to 2.5% in 2024, is expected to have a rosier year with household spending rebounding by 6.6% in 2025,' said the report. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ After an improved rainy season and prices for minerals such as gold firming up, Zimbabwean consumer firms are well placed for stronger consumer spending. Companies expected to benefit from this include beer and soft drinks manufacturer, Delta Corporation, which has cited stiffer competition in some beverage categories. Zimbabwean consumer discretionary spend however remains subdued, with data from Zimstats recently showing average earnings of 55% of the employed population at less than $100. Worse still, 'job losses within the past 3 months emanated mainly those engaged in agriculture and domestic activities, whilst IT and Electricity sectors had the lowest job' losses. Moreover, Zimbabwean companies have to absorb some of the legislation-linked costs of production, such as sugar taxes and fast-food taxes, to support volumes. IH Securities is thus skewed towards consumer-facing stocks that exhibit the ability to generate a significant portion of revenue in US dollar, have good management practices, and are also consistent in paying dividends. Companies offering defensive staples such as National Foods - in which Tiger Brands has an interest - were displaying volume growth, said the analysts. National Foods' maize division recorded a significant volume growth of 58% in May over the comparative nine-month period, largely attributable to the market dynamics. Dairy company, Dairibord, saw consolidated volume growth of 14% for its first quarter ended 31 March 2025. 'On the retail front, the past two years have been challenging for formal operators on account of several issues. As per leading retailers, a key impediment to viability has been S.I 81A of 2024, an exchange control act that mandated the selling of goods and services at the official exchange rate,' noted the report. It further though stated that Zimbabwe's operating environment for companies remained challenging overall, citing key issues such as elevated production costs as well as sporadic operating liquidity squeezes in light of the tightening of monetary conditions. It mentioned 'emerging cost pressures including the government's recent increase of 19.1% to the diesel levy' as further worsening costs for companies. Headwinds in Zimbabwe had already affected Hippo Valley, which has had to rightsize its workforce with 1 000 workers expected to be let go by August. OK Zimbabwe, another prominent retailer battling headwinds, is now undertaking a $30m rights issue to stabilize the company. The retailer has also announced further closures of stores, pointing to a 2025 year that 'remains volatile and fragile, but with a possibility of better performances' by consumer companies. BUSINESS REPORT
Zawya
09-05-2025
- Business
- Zawya
OK Zimbabwe's majority shareholders back $30mlm rights issue, CEO says
Grocery retailer OK Zimbabwe Ltd's majority shareholders have agreed to back a $30m rights issue to cover a "funding gap" and stabilise the company's financial position, its chief executive said. "Most of the top five shareholders have indicated interest in following their rights," CEO Willard Zireva told Reuters on Wednesday, 7 May 2025. Earlier this month, the company announced a capital-raising plan including a rights issue, the private placement of shares, and debt instruments to strengthen its balance sheet, liquidity, and support a strategic turnaround plan. It rehired Zireva as CEO earlier this year to lead the turnaround after he retired more than seven years ago. Previously, also as CEO, he had led the group through Zimbabwe's tumultuous hyperinflation era of 2008. OK Zimbabwe has been facing competition from smaller businesses amid their rapid growth. The surge in the informal, or grey, economy in the southern African country has spawned more price-competitive retailers, known as tuck shops, threatening the viability of more established formal retailers. The company said last month it owed $30.34m to suppliers, which it was struggling to service. It has shut down five of its outlets this year and struggled to stock several others. The company's major shareholders include Datvest Nominees Foreign, National Social Security Authority, Old Mutual Life, and Stanbic Nominees, which hold stakes of 19.99%, 16.09%, 13.36% and 12.9%, respectively. All rights reserved. © 2022. Provided by SyndiGate Media Inc. (
Reuters
08-05-2025
- Business
- Reuters
Grocery chain OK Zimbabwe's majority shareholders back $30 million rights issue, CEO says
HARARE, May 8 (Reuters) - Grocery retailer OK Zimbabwe Ltd's ( opens new tab majority shareholders have agreed to back a $30 million rights issue to cover a "funding gap" and stabilise the company's financial position, its chief executive said. "Most of the top five shareholders have indicated interest in following their rights," CEO Willard Zireva told Reuters on Wednesday. Earlier this month, the company announced a capital-raising plan including a rights issue, the private placement of shares, and debt instruments to strengthen its balance sheet, liquidity, and support a strategic turnaround plan. It rehired Zireva as CEO earlier this year to lead the turnaround after he retired more than seven years ago. Previously, also as CEO, he had led the group through Zimbabwe's tumultuous hyperinflation era of 2008. OK Zimbabwe has been facing competition from smaller businesses amid their rapid growth. The surge in the informal, or grey, economy in the southern African country has spawned more price-competitive retailers, known as tuck shops, threatening the viability of more established formal retailers. The company said last month it owed $30.34 million to suppliers, which it was struggling to service. It has shut down five of its outlets this year and struggled to stock several others. The company's major shareholders include Datvest Nominees Foreign, National Social Security Authority, Old Mutual Life, and Stanbic Nominees, which hold stakes of 19.99%, 16.09%, 13.36% and 12.9%, respectively.
