Agro-processing boost as Pick n Pay rakes in the profits from Zimbabwe

By Business Report


South African retail giant Pick n Pay is raking in the profits from Zimbabwe and its partner in the struggling country is now looking to open more stores buoyed by stronger performance from its other operations across city and resort hotels as well as agro-processing.
The South African grocer has a partnership with Zimbabwe’s Meikles in the TM Pick n Pay Supermarkets which competes with OK Zimbabwe and other smaller operators. There are about 55 stores – some of them co-branded –and the two parties say they intend to open more this year.
“The segment plans to open a number of new stores and there will be further upgrades of existing stores,” John Moxon, the chairman of Meikles said this week.
Meikles said revenue in the supermarkets division jointly owned together with Pick n Pay had risen from $414 million to $487.8 million in the year to the end of March. EBITDA earnings in the retail division rose from $23.8m to $34.5m.
The further expansion bid for Pick n Pay in Zimbabwe is underscored by the absence of borrowings on the chain’s balance sheet. This means that all resources at its disposal will be put into growth strategies.
Liabilities for Pick n Pay TM Supermarkets however increased from $43.3m to $56.1m, which was also matched by a significant value increase in assets from $76m to $85m.

Digital payments

The larger supermarkets in Zimbabwe are top performing, with OK Zimbabwe also having strong revenue generation and profitability of $582m and $16.6m, respectively, during the period to end March. The higher revenue generation by Zimbabwe’s big supermarket chains is mainly as a result of the adoption of digital payments in light of cash and forex shortages in Zimbabwe.
Meikles’s overall revenue across its operations quickened to $535m against $457.6m in the year earlier period, helping propel Ebitda earnings to $40m compared to $24.8m year earlier.
The hospitality division under which Meikles operates city and resort hotels witnessed an Ebitda increase from $1.8m to $4.1mn. The upcoming elections in Zimbabwe have largely driven up occupancy levels, especially in the city hotels category, say other industry executives.
“Both hotels are benefiting from a growth in occupancy during the first months of the new financial year (to March 2019),” said Moxon.
Refurbishments and upgrades of some of its hotels are also being planned for the next few months as competition intensify from other operators that are also face-lifting their hotels. There has been growing interest from tourists in Zimbabwe as a travel destination since the removal of former leader, Robert Mugabe last year.
Meikles’ rival hotel operator, African Sun said this month revenues for the first five months of the current year had soared by 30 percent to $20.9m, underpinned by growing foreign tourist arrivals at its hotels.
“Revenue up 30 percent to US$20.97 million from US$16.74 million achieved same period last year, domestic revenue was up 28 percent from US$9.05 million to US$11.60 million. Foreign revenue was up 32 percent from US$7.12 million to US$9.37 million,” said the company. – Source: IOL


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