Source: Business struggles to maintain profitability –Newsday Zimbabwe
RECENT financial results show that profit margins across listed companies have generally softened, reflecting rising costs and a volatile policy environment, a new report shows.
While top-line growth remains resilient—particularly in consumer-facing sectors supported by higher sales volumes—companies are facing increasing pressure on profitability.
This pressure stems from higher taxation and regulatory costs, as well as expenditure on utility alternatives amid poor service delivery, liquidity constraints, and a volatile exchange rate.
In its new September 2025 market report, financial services firm IH Securities said listed firms were facing pressure.
“In the equities markets, September was a tale of two cities, with the VFEX ALSI (Victoria Falls Stock Exchange all share index) sprinting 17,43% m-o-m (month on month) while on the ZSE (Zimbabwe Stock Exchange), the All-Share grew a muted 0,91%,” IH Securities said.
“While the operating environment has largely remained challenging, from the recently released financials to the end of June 2025, we have noticed themes of resilient toplines backed by volume growth, especially across consumer-facing companies.
“However, margins have largely softened, emanating from cost pressures and a volatile policy environment. With this in mind, we are in favour of companies with agile management teams and those with consistent dividend policies.”
The Zimbabwe National Statistics Agency’s (ZimStat) second quarter reports, released last week, confirmed findings of risks to profitability for firms.
“For 2nd quarter 2025, the general business climate was considered as being satisfactory by 44,1% of respondents in all sectors combined, with 26,4% perceiving the business as good,” ZimStat said.
“The sectoral analysis showed that 55,5% of respondents in financial and insurance services and 50% in construction had similar sentiments that the business environment was satisfactory.”
In terms of the financial situation, the proportion of respondents who had the sentiment that the financial situation was good ranged from 12,1% in the transportation and storage sector to 25% in the financial and insurance sector.
“Negative net balances were observed across all sectors, except for the financial and insurance sector,” ZimStat said.
The Business Tendency Survey for the Services Sector covered accommodation and food services, transportation and storage, construction, wholesale and retail trade, and financial and insurance activities.
ZimStat said capacity utilisation for the manufacturing sector was 48,2%, from 47,7% in the first quarter.
“For large manufacturing companies, second quarter 2025 capacity utilisation was 57,3%, up from the first quarter value of 53,2%,” ZimStat said.
“For small and medium companies in the sector, capacity utilisation for the second quarter 2025 was at 46,5%.”
The Manufacturing Confidence Index increased by 3,8 points to 7 in the second quarter.
“About 50% of respondents in the manufacturing sector viewed production levels over the second quarter 2025 as having remained unchanged, as 22,7% were of the view that the levels had increased,” ZimStat said.
For the mining sector, ZimStat said capacity utilisation for the second quarter was 56%, from 55,4% in the first quarter.
“For the mining sector, 70,3% of the respondents perceived that production levels had remained the same over the second quarter of 2025,” ZimStat said.
“Three major constraints to production cited by respondents in both manufacturing and mining sectors were: cash flow difficulties, shortage of electricity, and economic environment uncertainty.”
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