• Revenue soared by 88%
  • Profit before tax grew by 79%
  • Room occupancy for the hospitality segment increased from 11% to 35%

Harare- As the battle for currency and economic stability continues hitting above the roof, the Zimbabwe Stock Exchange (ZSE) -listed diversified group, Meikles Zimbabwe has shrugged off headwinds to close its first quarter for the full year ending 2023 on a positive note, recording growth across all units.

Meikles Limited is primarily invested in agriculture, hotels and the retail sector. It operates six business segments namely hospitality, the retail business which includes department stores, wholesalers and supermarkets, agricultural financial services and security. Its well-known brands include the Victoria Falls Hotel, Holiday Inn Hotel and Meikles supermarkets.

The period between April 2022 to June 2022 (first quarter ended 30 June 2022) was defined by a record rise in both month-on-month and year-on-year inflation, record local currency depreciation against the United States dollar and retrogressive monetary measures by the Treasury and RBZ that saw the banning of lending and record interest rates hike. The implication of these was on the customer’s purchasing power as the local currency which most of the people earns depreciated rapidly. 

In May alone, the local currency depreciated by a record 33% since the introduction of the auction market on 23 June 2020. Meanwhile, over the three months, the currency depreciated by a record 61% wearing away the purchasing power of the local currency. The increase of interest rates to a record 200% also affected productive business sectors as borrowing became expensive.

It is against this background that Meikles Limited Zimbabwe fared well on revenue, profit and sales volumes with room occupancy advancing by more than four folds. Revenue for the group grew by more than four folds from a 21% uptick in the first quarter of 2021 to rise by a significant 88% in inflation-adjusted terms. This led to profit before tax almost doubling after increasing by 79% ahead of the prior year.  However, despite a solid effort from the group to match up the cards, it should be noted that the period under review gained more from relaxed COVID-19 restrictions.

The pie-chat below shows the Group’s key highlights for the quarter ended 30 June 2022

“The growth in profit before tax was 791% in historical cost terms, boosted by exchange gains realised on US$ denominated cash balances held by the Group’s subsidiaries,” the Group said in a trading update.

“Exchange gains on the Group’s US$ 19 million cash balance from the disposal of the investment in Mentor was ZWL 6.7 billion and is included in other comprehensive income.”

As a result, all operating subsidiaries generated positive cash flows during the period under review while the Group’s financial stability remains strong supported by significant cash balances.

Regarding sales volumes performance, sales for the supermarket grew by 39% for the period compared to the same period in the previous financial year while stock levels in the stores remained adequate despite disruptions in the supply chain arising from both international and local factors. The Russia Ukraine war and South Africa’s rising inflation affected the supply of wheat, cooking oil and fuel in the country, raw materials that are key to the growth of the sector.  From within, the Group suffered from rapid depreciation of the local currency which had an effect on operating costs.

Meanwhile, room occupancy for the hospitality segment increased from 11% to 35%, a growth of 24 percentage points in comparison to the same period in the previous year.

“The segment is benefiting from the continued easing of both local and international COVID-19 restrictions,” the Group said.

The average room rate and revenue per available room grew by 36% and 327% in US$ terms respectively while the mix for the period was 90% foreign and 10% local. The Group is optimistic about its prospects going forward despite the evolving challenges in the operating environment. According to the  Group, both expansion and replacement capital expenditure plans continue to be implemented.

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