- Sales volumes decline partially resulted in revenue decrease
- Group revenue was down by 31%
- Medical segment did not trade due to working capital challenges and inadequate stock
Harare – ZSE-listed pharmaceuticals company, MedTech Group registered a 70% decline in sales volumes in the year ended 31 December 2019 compared to the prior comparable period.
The decline has been attributed to a decrease in consumer spending as income levels have not kept up with rising general price levels which has therefore seen aggregate demand remaining subdued.
Volumes in the first quarter ended 30 March 2020 remained subdued, dropping by 68% compared to the prior comparable period due to the same reasons which affected the Group’s performance in 2019.
In a statement accompanying the Group’s full year financial results, MedTech Chairperson, Mrs. Rose Mazula stated that the Group’s revenue for the period under review decreased by 31% to ZWL$ 70 481 356, a result of various factors which include a stance by management to restrict sales due to the continual devaluation of the debtors book with the aim of preserving shareholder value.
In addition, revenue also tumbled due to stockouts because of challenges in sourcing replacement stock of raw materials and goods due to stop supply from foreign creditors because of overdue balances.
The FMCG segment which includes MedTech Distribution, Smart Retail and Choice Brands saw revenue declining by 38% due to a decrease in sales volumes, a result of among other factors, grey market imports.
In relation to the COVID-19 pandemic which hit in the first quarter of 2020, the division which markets and distributes sanitizers and personal care products and the manufacturing segment operated at reduced levels during the lockdown period.
Despite increased demand for products manufactured by the Group, sales volumes remained depressed as most chain stores and wholesales were restocking basic commodities and not restocking products supplied by the Group.
The Medical segment which has MedTech Medical and Scientific (Private) Limited as well as the Education and Laboratory Services Division did not trade in the period due to working capital challenges and inadequate stock as foreign suppliers maintained their stance of cutting lines of credit.
Chicago Cosmetics (Private) Limited which is the manufacturing unit registered an 18% increase in revenue, growth attributed to increased product offering while margins remained stagnant.
MedTech Group consists of retail, manufacturing, distribution and services business units with its major operations located in Harare and Bulawayo.
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