Retail giant-OK Zimbabwe Limited is confident of a healthy cashflow in fourth quarter amid the possibility of a lockdown extension to shorten business hours, the Group said in its latest trading update for the nine months to December 2020, released this morning.
With the Covid-19 pandemic likely to persist up to the end of the company’s financial year and beyond, the Group is confident of generating sufficient cash to settle its obligations.
The Group is part of essential services being in the food and provisions sector and is thus allowed to operate, albeit for significantly reduced hours.
“The Directors and management have assessed the Group’s cash generating capacity and are satisfied that the Group is capable of settling all its obligations as they fall due as well as continue operating profitably. In addition, the Group has banking facilities in place which can be utilized if the need arises,” said OK Zimbabwe, Secretary Margaret Munyuru.
“While the curtailment of non-essential business activity and restrictions on people mobility impacts both the supply chain and customer activity in our stores, the business has experienced reasonable levels of trade,” she added.
Zimbabwe entered a hard lockdown on 5 January 2021 as COVID-19 cases spiked, and due to the continuous increase in cases, the possibility of an extension is firming.
Most businesses in Zimbabwe’s fragile economy were already battling legacy challenges prior to the advent of the COVID-19 pandemic and have further struggled to stay afloat due to limited business activity during the lockdown.
However, OK Zimbabwe managed to post strong business performance during the third quarter to December 31, 2020 thanks to relaxation of lockdown measures towards the end of the year.
The foreign currency auction system improved availability of foreign currency leading to relative stability of the exchange rate as well as improved supply and prices of goods.
Under these conditions the Group was able to stock up its stores adequately in readiness for the quarter as well as the festive season business activity.
Revenue grew by 27 percent for the quarter and 3 percent for the year to date in inflation adjusted terms.
Sales volumes grew by 7 percent for the quarter but were below prior year by 15 percent for the nine months.
While the year to date volume is negative this is an improvement from the retreat by 26.9 percent reported for the half year ended 30 September 2020.