Hostile business environment drives Afdis volumes down in HY2020

  • Volumes plunged 35%
  • Revenue grew by 25%
  • Operating income increased by 15%
  • 71% profit contraction

Harare – Zimbabwe Stock Exchange listed alcoholic beverage maker, African Distillers Limited (Afdis) has joined the band wagon after registering low volumes, as the business environment succumbs to the prevailing macro-economic challenges.

According to the company’s half year financial results, volumes for the half year ended 31 December 2019 dipped by 35% compared to the same period last year.

This performance was attributed to the shift from premium and mainstream segments to value products in reaction to the erosion of disposable incomes. The spirit segment was negatively impacted by the prevalence of counterfeits and illicit alcoholic beverages.

Inflation adjusted revenue for the period under review rose by 25% to ZWL$223 million from ZWL$178 million recorded in the prior comparable period. This was driven by replacement cost pricing.

The group recorded a profit of ZWL$10 988 491, a 71% contraction from ZWL$ 37 907 546 registered in the previous half year period.

Operating income for the half year period increased by 15% from ZWL$54.4 million in the prior comparable period to ZWL$62.7 million.

Given the shift in market dynamics, companies are attempting to retain shareholder value by revising dividends and Afdis has also done the same.

“Notice is hereby given that the Board of Directors declared an interim dividend, number 90, of ZWL10.00 cents per share payable in respect of all the qualifying ordinary shares of the Company. This dividend is in respect of the half year ended 31 December 2019.”

The interim dividend amounts to ZWL$11 730 602 and the ZWL10.00 cents is payable on 23 April 2020.

During the period under review, the company added that earnings per share were down 71% to ZWL9.37 cents.

The company’s chairman Pearson Gowero said the future remains uncertain given the ongoing shortage of foreign currency, hyperinflation and poor agricultural season and this will impact negatively on volume and margin performance.

The company will however, continue to explore strategies designed to best serve the market and ensure business continuity.

P Gowero also said, “Net funds were at ZWL45.5million. Most of this was awaiting foreign currency allocation at the banks to enable funding of external supplies for business continuity.”

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