- Distribution Group Africa revenue up by 16%
- Devaluation of local currencies negatively affecting net assets
Listed Axia Corporation reported an improved regional performance in the six months period to 31 December 2019 compared to the same period last year.
The Distribution Group Africa registered a consolidated turnover growth of 16% over prior year in US$ terms.
Axia attributed the growth to the acquisition of new agencies like Nestlé and Blue Band in Zambia and the addition of Pro Group Malawi.
The company said gross margins also improved as a result of the sales mix which filtered into operating profit.
Commenting on the regional performance, Axia highlighted that despite high levels of stock write-offs and provisioning in Zambia on the back of customer returns, the improved regional performance is encouraging.
The depreciation of local currencies of the countries in which the business operates against the US$ is negatively affecting the net assets of the consolidated business.
The group however remains optimistic about an improvement in the general trading conditions in Malawi which is currently economically stable in spite of the recent political instability.
Meanwhile Distribution Group Africa – Zimbabwe experienced an 11% decline in turnover and volumes were 39% below the prior year.
Foreign currency shortages resulted in the business reducing its imported stock component due to the concomitant pricing pressures.
Following the dismal volumes performance, Axia is looking at measures of increasing volumes of locally produced products as a way of recovering lost volumes.
According to the group, “Competition in this market remains strong with numerous independent traders. The focus, however, is on providing a comprehensive distribution service with efficient nationwide coverage and this will result in the continued sustainability of the business.”
Inflation adjusted total revenue for Axia was 4% higher at ZWL$1 728 687 from the previous ZWL$1 665 074 in 2018.
On the outlook the company said, “Given the current economic environment, it is important to explore various ways of managing risk whilst preserving value for all stakeholders. On the statement of financial position, the Group’s key focus areas will be on managing foreign creditor positions, securing additional inventory as well as managing gearing levels and this will be done in tandem with environmental changes.”
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