Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says the anticipated profit growth for companies in the service sector in the half year ending June 30 2017 is a response to inflationary pressure.
In an interview, MCCCI chief executive officer Chancellor Kaferapanjira said while it is good in the short-term for firms in the services sector to make profits, the trend is not sustainable in the long-term.
Kaferapanjira was reacting to the recent trading statements issued by six Malawi Stock Exchange (MSE)-listed companies—TNM plc, Mpico Limited, Nico Holdings Limited, Sunbird Tourism Limited plc, FMB plc and National Investment Trust Limited—whose profit after tax are expected to surpass that of the same period last year.
Published trading statements for the half-year ending June 30 2017 show that TNM plc profit is expected to be more than 50 percent, Mpico Limited more than 20 percent, Sunbird plc more than 35 percent, FMB plc more than 60 percent, Nico Holdings Limited more than 20 percent while Nitl is expecting its profit to be 150 percent more.
Said Kaferapanjira: “When you look at these companies, all of them are services companies [and] none of them are exporters or manufacturers.
“What sort of businesses is making money should determine the future of the economy because manufacturing has so many linkages in the economy unlike the companies in the services sector.”
He said the performance may not necessarily mean the economy is doing well in the long-term, but it may be a sign that inflationary pressures have pushed up some prices and companies are just making inflationary profits.
In its financial statement for the year ended December 2016, FMB Group chairperson Hitesh Anadkat said good rains and higher commodity prices combined with rallies in equities, especially in Malawi, underpin hopes of more normalised growth and investor confidence this year.
“We look forward to reporting our 2017 performance not only with confidence but with great anticipation,” he said earlier.
Nico Holding Limited plc managing director Vizenge Kumwenda said basing on the positive outlook of the business environment in Malawi, the group expects improved performance this year compared to last year.
Mpico Limited board chairperson Edyth Jiya and managing director Damien Kafoteka said in a joint published statement that the group’s future looks bright, especially after the successful capital restructuring of the property management firm in 2016 which would result in reduced finance charges.
Sunbird Tourism Limited plc chairperson Phillip Madinga said going forward, there are signs of some recovery with the rate of inflation dropping month-on-month due to availability of maize and a stable kwacha. n