Inflation peaked at 38.8% in October 2019 and then continued its downward movement, which began in the prior quarter, to end at 16.6% for the month of December 2019. Although still relatively high, declining inflation impacts positively on disposable incomes and volumes. The mortgage market remained subdued due to low incomes.
Sales volumes were 15% lower than the same period last year as a result of declining effective demand. Selling is being ramped up targeting funded government projects and cluster housing development while riding on short lead times enabled by high stock levels.
Inflation adjusted revenue for the quarter was 8% above same period in the prior year. Margins remain under threat from cost push factors such as demands for higher wages and increases in electricity charges, maintenance spares and raw material input prices.
Reducing inflation presents opportunities for volumes increases. We also anticipate better business in the second quarter which is traditionally when the construction industry resumes operations after the rainy season. Opportunities are being exploited in the reconstruction of the cyclone ravaged Chimanimani region and other ongoing housing development projects. Profitability is expected to continue into the ensuing quarter.
By Order of the Board