- Taxation rocketed by 110% to ZWL2.1 billion
- Interest Expenses soared by over 2000% from ZWL20 million to ZWL609 million
- However, production across all segments increased
Harare- The Zimbabwe Stock Exchange (ZSE)- listed wine and spirit maker, African Distillers (Afdis) has recorded a surge in tax expenses and taxation charges during the full year ended 31 March 2023 resulting in narrowed after-tax-profit.
After tax profit lessened to ZWL1.5 billion from ZWL2.1 billion in full-year 2021. This was a 29% decrease over a period of 12 months.
Both basic earnings per share and headline earnings per share decreased. This was despite the Company recording growth across all sectors.
Basic earnings per share decreased from 1894.13 cents to 1318.24 cents while headline earnings per share from 1894.59 to 1305.57 cents.
Interest expenses soared by 2945% to ZWL609 million from ZWL20 million in the comparable year while taxation shoot to ZWL2.1 billion from ZWL1 billion last year. This was a 110% increase in taxation charges, due to inflationary pressures and an aggressive tax regime.
During the period under review, bank policy rates remained high in the region of 200% to 140% making borrowing costly.
Commenting on the operating environment, Afdis chairperson, Matlhogonolo Valela said it was tough, infested with power deficits, currency instability, inflationary pressures, and exchange rate volatilities.
Valela added that despite cost containment measures being put in place over the period, cost pressures were experienced in distribution, fuel and power, payroll and maintenance.
“The operating environment was complex and uncertain, characterised by high inflation, high interest rates, and increased power supply outages,” said Valela in a statement.
However, despite the inconvenience, volumes grew to 18% mainly driven by Ready to drink (“RTD”) segment which grew by 23%. Wines and Spirits volumes grew by 16% and 14% respectively.
“The increase in volume was due to improved product availability, increased market penetration and promotional activity.,” added Valela.
Increased production led to improved revenue which soared by 56% to ZWL41 billion whilst operating income increased by 15% to ZWL5.4 billion. The market witnessed an increased US$ transaction flows which helped in sustaining the Company’s working capital requirements.
In United States dollars terms, revenue increased by 15% to US$49.4 million and operating income was at US$8.5 million.
Going forward, the Company expects the trading environment to remain challenging and uncertain. However, it is also anticipating that there will be opportunities for business growth.
Valela said the Company will continue leveraging on ensuring full product availability, market share protection and brand portfolio expansion for business growth.
He added that focus will also be on production efficiencies and cost containment initiatives.
After recording a profit, a final dividend of US$0.0050 per share, amounting to US$ 593,137 was declared. An interim dividend of US$0.0025 per share was paid in December 2022 bringing the total dividend to US$ 0.0075 per share.
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