- Revenue went down by 4%
- PAT however, remained firm
- About Axia
Harare- Axia Limited, a diversified retail enterprise listed on the Victoria Falls Stock Exchange, experiences a 4% decline in revenues for the half year to full year 2024. However, the company successfully increases operating profit by 5% and after-tax profit by 7%, showcasing effective management of overhead and associated costs.
Operating in an economic environment plagued by inflationary pressures, limited public spending, and controversial monetary policies in Zimbabwe, Malawi, and even Zambia, Axia's ability to manage costs and sustain operating profit reflects management's resilience in the face of volatility.
With 38 nationwide retail outlets and retail automotive spares across multiple channels, Axia Limited encompasses three business units: TV Sales and Home, a prominent furniture and electric appliances retailer; Transerv, specializing in automotive spares; and Distribution Group Africa, a well-established distribution and logistics company.
Founded in 2016, Axia achieved multi-million-dollar status within a short span of less than eight years, generating revenue of US$97.24 million in the latest period, slightly down from US$100.80 million in the prior half to full year 2023. Operating profit rose to US$12.92 million from US$12.34 million, with a net profit of US$6.02 million compared to US$5.64 million.
In Zimbabwe's challenging business environment characterized by inflation, high interest rates, policy uncertainties, and constrained consumer spending, Axia caters to civil servants who primarily earn in the less valuable Real Time Gross Settlement (RTGS) currency. To combat competition from the informal sector, which offers similar products at lower prices, Axia leverages quality and hire purchase options. Increased credit sales during the period helped the company withstand competition from informal traders.
Key highlights from Axia's business units include
-TV Sales and Home: 6% growth in revenue and an 11% increase in volumes. The unit expanded with the opening of two new bed stores in Borrowdale and Gweru, ventured into cellphone sales, and aims to enter the solar business. Positive performance at Legend Lounge resulted in a 34% volume increase and a 16% revenue upturn.
Transerv: Revenue and volume both increased by 8%. The unit opened six retail branches and two fitment centers. Furthermore, the group increased its shareholding from 50.51% to 87.75% effective from July 1, 2023. Axia introduced solar products and plans to leverage credit sales.
Distribution Group Africa: Sales volumes at DGZ declined by 39% compared to the previous period due to formal traders failing to adhere to payment terms. In Malawi, revenue grew by 42% in US dollar terms and 90% in Kwacha terms, with volumes increasing by 26%. In Zambia, despite a 22% depreciation of the Kwacha, turnover increased by 18% in Kwacha terms due to inflationary pressures, but declined by 7% in US dollar terms.
Looking ahead, Axia anticipates a positive outlook following its expansion of operations, introduction of new product ranges, and restructuring initiatives. The company relies on credit sales and product quality to effectively compete with the informal sector, which offers similar products at lower prices.
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