Latest news with #TawandaKarombo
IOL News
8 hours ago
- Business
- IOL News
OK Zimbabwe secures vital $20 million lifeline amid challenging retail landscape
For OK Zimbabwe, the plan for revival plan includes securing a financial package to turnaround the company. This month, OK Zimbabwe raised $20m through a rights offer, the company said Monday. Image: Tawanda Karombo/Independent Newspapers Troubled retailer, OK Zimbabwe has secured a financial life-line pivotal to its revival bid under new management. The company, which competes in Zimbabwe's retail sector against Pick n Pay, Spar and other smaller players, intends to raise as much as $30 million to revive its struggling retail operations. OK Zimbabwe's battle for survival comes against the backdrop of wider wholesale and retail sector challenges that include monetary challenges and pricing distortions that are driving away suppliers. For OK Zimbabwe, the plan for revival plan includes securing a financial package to turnaround the company. This month, OK Zimbabwe raised $20m through a rights offer, the company said Monday. 'The rights offer was fully-subscribed through a combination of shareholder take-up and shares taken up by the underwriters in accordance with the underwriting agreement,' said Margaret Munyuru, OK Zimbabwe company secretary. 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 ✕ Shareholders in the company subscribed to 77% of the rights under offer, helping to raise $15.3m. The remaining 23% was snapped up by the scheme's underwriters, who put in $4.6m. The OK Zimbabwe rights offer opened July 21 and closed August 4, the company said. Focus for the company's revival and capital raise has now shifted to the disposal of some property assets. This will help it to raise about $10m. Over the past two years, Zimbabwe's retail sector has faced a challenging operating environment. Retail operators in Zimbabwe say '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,' analysts at IH Securities noted recently. They also cited elevated production costs as well as sporadic operating liquidity squeezes in light of the tightening of monetary conditions as hobbling retail operators and manufacturers that supply store operators. As part of its turnaround strategy, OK Zimbabwe is raising capital ' to bridge the funding gap and stabilize the company's financial' position. The funds will be used to 'ensure smooth business operations' and strengthen the company's balance sheet and liquidity position. After 'experiencing significant operational and financial difficulties arising from both endogenous and exogenous factors, driven by a challenging operating environment,' OK Zimbabwe has seen its financial performance nosedive. It blamed this on a difficult operating environment characterized by 'macroeconomic volatility, including pricing issues related to the exchange' rate. OK Zimbabwe argues that informal players that now dominate Zimbabwe's economy 'operated without this constraint, giving them a competitive' advantage. Volumes and revenue in top Zimbabwean retailer, OK Zimbabwe fell by 36% during the lucrative quarter to end of December, with the company, rocked by de-stocking and store closures.
IOL News
28-07-2025
- Business
- IOL News
Delta Corporation faces labour challenges in South Africa while thriving in Zimbabwe
Zimbabwean beer brewer and soft drinks maker, Delta Corporation, says the United National Breweries volumes fell by 8% in the quarter to the end of June in South Afroica. Image: Supplied Tawanda Karombo Zimbabwean beverage giant, Delta Corporation, is experiencing contrasting fortunes in its regional markets after it battled labour disruptions in South Africa and recorded brisk business for its lager beer volumes back home, driven by tobacco sales and resurgent gold prices. In South Africa, Delta's subsidiary United National Breweries volumes fell by 8% in the quarter to the end of June. Delta's company secretary, Faith Musinga, said United National Breweries 'witnessed some unfortunate disruptions from labour unions and pressure groups' in South Africa during the quarter under review. However, she said this has now been resolved. In contrast, Delta said it has been experiencing 'significant changes to market channels arising from the informal sector growth, operational pressures in formal retail sectors' as well as 'varied application of route-to-market' regulations in Zimbabwe. The company also had to operate against the currency exchange rate related price distortions and challenges facing the formal retail channels in Zimbabwe. Nonetheless, 'signs of strong consumer spending' driven by what the company described as stability in the local currency exchange rate, a record-breaking tobacco marketing season and increased gold mining activity helped drive up volumes in Zimbabwe. 'Diaspora remittances are benefiting from the firming cross exchange rates such as the rand and pound, our key source markets. The pricing distortions arising from exchange rate disparities have moderated following the promulgation of revised exchange controls on pricing,' said Musinga. This had seen lager beer volumes in Zimbabwe grow by 19% over the previous contrasting quarter. More so, demand has remained strong, 'benefiting from the increase in consumer incomes' and stable pricing. In the soft drinks category, where the company has been facing intense competition from the local Pepsi bottler, Delta volumes remained subdued over the quarter to end June. It also blamed the recently imposed high sugar content surtax, saying it was impacting on price competitiveness. The surtax had also resulted in the influx of similar products imported from the region where the sugar tax does not apply. Smuggling is also adding to the woes for Delta. 'A total of $4.5 million in sugar tax was paid during the quarter. The prevailing sugar tax structure continues to place unsustainable pressure on the viability of the category,' said the company. Despite these challenges, Delta raised overall revenues for the quarter by 25%, mainly as a result of volume growth in the alcoholic beverage businesses in Zimbabwe, helping to offset the price moderation in the sparkling beverages business. About 85% of Delta's sales volumes were undertaken in US dollar, said the company. In a recent securities and advisory research note on Zimbabwe's consumer sector, analysts at IH Securities said 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 US 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. Zimbabwean consumer discretionary spend, however, remains subdued, with data from Zimstats recently showing average earnings of 55% of the employed population earning 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. BUSINESS REPORT
IOL News
22-07-2025
- Business
- IOL News
Sibanye-Stillwater expands reach with R1. 4bn Metallix acquisition
Metallix complements Sibanye-Stillwater's US recycling operations in Montana and Pennsylvania, adding processing capacity, proprietary technology and extensive knowledge and experience. Image: Supplied Tawanda Karombo Sibanye-Stillwater has made a strategic move by acquiring Metallix Refinery, a US-based precious metals recycler, for an impressive $82 million (just above R1.4 billion). This acquisition is poised to not only strengthen Sibanye-Stillwater's foothold in the precious metals recycling market but also to drive additional revenue worth approximately R4bn, bolstering its financial performance as it navigates the complexities of the current market. Bruce Williamson, mining analyst at Integral Asset Management, told Business Report on Monday that at spot refined prices, revenues from Metallix's financial year ending 31 December 2024 production would likely top R4.2bn, which would be fairly significant for Sibanye-Stillwater. 'I think that it is strategic for the dominant SA platinum group metals (PGM) miners to maintain control over the +-30% of recycled material (and moreover) SA PGM miners are part of a small number of PGM refineries. The other benefit is that recycling gives Sibanye-Stillwater an important insight into the scrapped auto market,' said Williamson. Shares in Sibanye-Stillwater rose 3.5% to R42.45 in response to the announcement of the transaction on the JSE on Monday. On the back of a resurging PGM prices, the company's stock has firmed up by 17.51% and 30.99% in the past seven and 30 days, respectively. Sibanye-Stillwater described Metallix as a firm that produces recycled precious metals, including gold, silver and PGM, primarily from industrial waste streams. The company operates two processing and recycling operations in Greenville, North Carolina and has a global customer base, which it services from the United Kingdom and South Korea, in addition to those in the US. 'Metallix complements Sibanye-Stillwater's US recycling operations in Montana and Pennsylvania, adding processing capacity, proprietary technology and extensive knowledge and experience,' said Sibanye-Stillwater. 'The acquisition enhances the group's global recycling reach and internal logistics capabilities, increasing its ability to source materials from multiple regions, facilitating the delivery of end-to-end solutions to customers.' Sibanye-Stillwater expects the transaction to close during the third quarter of 2025, subject to receipt of applicable regulatory approvals customary to a transaction of this nature. Williamson said the acquisition was 'a strategic, standalone PGM decision'. It, however, comes at a time when Sibanye-Stillwater's Kloof and Driefontein gold operations 'are getting to the stage where ensuring enough monthly mill feed is a challenge' despite elevated gold prices. 'Hopefully, the high rand gold price gives them a window to complete development at Burnstone and get into production,' said Williamson. Sibanye-Stillwater CEO, Neal Froneman, is however chuffed up about reaching agreement to acquire Metallix. 'We are excited to be adding Metallix to our existing recycling footprint – the scale, technology and know-how adds positively to our existing recycling operations and advances our urban mining strategy. We expect significant value uplift through the large number of synergies with our existing recycling operations,' said Froneman. For the year to December, Metallix processed approximately 4.2 million pounds of precious metals bearing waste materials and produced approximately 21 000 ounces of gold, 874 000 ounces of silver, 48 000 ounces of palladium, 48 000 ounces of platinum, 4 000 ounces of rhodium, 3 000 ounces of iridium and 263 000 pounds of copper. According to Williamson, recycling accounts for about 30% of supply but excludes inventory from investment/ETFs that is coming back into the market. He explained that Sibanye-Stillwater was 'large enough to trade through commodity up and down' cycles as has happened in the past few months. 'There are times as experienced late last year and during the first five months of 2025 when recycling is not profitable and the flow of spent autocats dry up,' he said. BUSINESS REPORT
IOL News
14-07-2025
- Business
- IOL News
Big tobacco urges government action to curb illicit trade and promote safer products
The South African tobacco industry appears to be pulling in the same direction in demanding a conducive regulatory and policy framework, including favourable and separate taxation for new tobacco cigarettes. Image: File photo Tawanda Karombo Big tobacco industry players in South Africa believe the government can speed up transition towards less harmful products and effectively end trade in illicit cigarettes with better regulatory and policy attention to bad practices across the sector. Tobacco cigarette manufacturers Britis American Tobacco South Africa (Batsa) and Polaris Manufacturing (formerly Gold Leaf Tobacco Corporation) last week traded accusations of fueling trade in illicit tobacco cigarettes through under-pricing and imports. This comes despite the industry touting new tobacco products such as pouches and e-cigarettes as key in reducing the harm caused by combustion cigarettes. The South African tobacco industry appears to be pulling in the same direction in demanding a conducive regulatory and policy framework, including favourable and separate taxation for new tobacco cigarettes. 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 ✕ Ad Loading They say this will unlock fresh investments into the new tobacco products and encourage transition from combustible cigarettes that experts say are harmful. This comes against the backdrop of growing adoption for the new products, according to Tommaso Di Giovanni, vice president for international engagements at Philip Morris International, who on Monday said uptake in South African cities such as Cape Town was picking up. 'We do see some product adoption in Cape Town. Some of these products like vapors are being adopted in Cape Town,' he said in an interview. Di Giovanni feels though that the adoption of less harmful tobacco products in South Africa can be sped up with the adoption and implementation of the right policies. 'I think the progress could be much faster with the right regulation, with policies that encourage adoption,' he said. Johny Moloto, the head of corporate and regulatory affairs at rival tobacco manufacturer Batsa, also emphasised that the harm from these new products was significantly reduced. Moloto said that the harm in tobacco cigarettes comes 'from the act of combusting the cigarette and the smoke it emits, which contains all those toxins that can impact the consumer's health' as well as that of passive smokers. However, other stakeholders such as health experts and the World Health Organisation are opposed to this. They argue that the harm emanates from tobacco and from the nicotine that is also present in pouches and e-cigarettes and vapors. Nonetheless, Batsa reckons that proper regulation of less harmful tobacco products can help accelerate the transition to a smoke free South Africa. Moloto said the Tobacco Products and Electronic Delivery Systems Control Bill being pushed by South Africa was adopting an 'almost prohibitive approach' as it was punitive than being an enabling policy. 'We hear that it will be self-enforcing [but] there's no enforcement instrument in that want to put as part of that proposal, a ministerial Commission... if you give so much power to ministerial overreaching, the consequences could be very dire,' he said. Both Batsa and Philipp Morris International say they are working on replacing traditional cigarettes with smoke-free products. Di Giovanni said the tobacco industry in South Africa was now shifting towards smokeless products. Although Philip Morris International has a target of having two-thirds of its revenues coming from smoke-free products by 2030, it believes "it's important to expand the availability of the product" while countries such as South Africa had to ensure that investment friendly conditions for the industry were in place. 'Once the conditions are there, we will invest in commercial efforts, we will invest in communications, we will invest eventually in manufacturing where appropriate to make sure that people have access to the product. But again, the conditions needs to be there first,' Di Giovanni explained. The South African Tobacco Transformation Alliance (SATTA) also fees that the South African government is putting the future of the entire tobacco industry at risk if it does not take swift action to end illicit trade in cigarettes. Francois van der Merwe, spokesperson for SATTA, said expansion of the illicit sector was endangering the last remaining jobs in the industry and causing the government to lose out on potential tax revenue of approximately R28 billion annually. 'The solutions lie in greater cross-authority collaboration, a beefed-up SA Revenue Service presence in all cigarette factories, revoking licenses of those avoiding taxes and introducing a Minimum Retail Price of R37 for a pack of 20, which will make enforcement much easier for all law enforcement agencies,' said Van der Merwe. BUSINESS REPORT
IOL News
08-07-2025
- Business
- IOL News
Local manufacturers fuel illicit cigarette trade in South Africa, warns BAT
As much as R28 billion in annual tax revenue was being lost to illicit trade, exceeding the South African Revenue Service's (Sars) entire additional collection target of R20bn. Image: Supplied Tawanda Karombo British American Tobacco South Africa (BATSA) has pointed the finger at local manufacturers for exacerbating the illicit trade in cigarettes. Their claims come on the back of a study released by the company, shedding light on the alarming prevalence of illegal cigarette sales in the country. This issue, which was once largely perceived as a cross-border problem, has now morphed into a serious domestic challenge that threatens the economy and public health. Speaking after the release of a BATSA-commissioned study into the pricing of tobacco cigarettes in South Africa on Tuesday, Johny Moloto, the company's head of corporate and regulatory affairs said illicit trade in cigarettes was now a domestic concern for the country. 'This is no longer just a cross-border issue. This is a homegrown crisis, fueled by local manufacturers who continue to operate with impunity while the state loses billions in revenue,' said Moloto. Illicit trade in tobacco cigarettes is worsening in South Africa, with over 70% of retail outlets selling the products below the mandated minimum tax price. Commissioned by British American Tobacco (BAT) and independently conducted by Ipsos, the 2025 report outlines alarming national trends in the illegal tobacco trade, identifying South African manufacturers as the primary culprits behind the growing black market. Conducted by Ipsos, the Cigarette Retail & Wholesale Price Research report reveals that 76.7%, up from 27.4% in 2022, of South African retailers were now 'selling cigarettes below the minimum' tax threshold. As much as R28 billion in annual tax revenue was being lost to illicit trade, exceeding the South African Revenue Service's (Sars) entire additional collection target of R20bn. 'Despite increased raids and product seizures over the past year, illicit cigarette availability has continued growing, indicating current strategies are ineffective. locally manufactured brands continue to dominate the market for products selling below Minimum Collectable Tax price,' noted the report. According to the Customs and Excise Act, the Minimum Collectable Tax price for a box cigarettes in South Africa should sell for above R26.22 a pack after accounting for levies. However, results from the survey show Gold Leaf Tobacco Company as having the highest prevalence of products purchased, accounting for 43% of total outlet sample universe. Within the portfolio of the Gold Leaf Tobacco Company, 78% of products purchased retailed for R20.00 a pack and below whilst 89% of products purchased. BATSA had the second-highest prevalence of products purchased accounting for 13% of the total outlet sample. 'Within the BATSA portfolio of products purchased, 1.0% of portfolio products purchased retailed for R20.00 and below whilst 1.5% of the products purchased retailed for under the Minimum Collectable Tax of R26.22 and below,' notes the Ipsos report. It added that Afroberg had the third highest prevalence of products purchased, accounting for 8% of the total outlet sample. Within the Afroberg portfolio of the product purchased, 92% of portfolio products purchased retailed for R20.00 and below, whilst 96% of products purchased retailed for under the Minimum Collectable Tax of R26.22 and below. The study disclosed that 'the most common retail price was R10, found in nearly 1 in 5' transactions. It further noted that of the 23 manufacturers identified in the illicit chain, 14 were based in South Africa, accounting for 91% of the illicit stock.
