Afdis records 35 percent decline in volumes

Harare (New Ziana)-Listed wine and spirit maker Afdis total volumes for the six months ended 31 December 2019 declined 35 percent as reduced consumer spending took a toll on demand but revenue rose 25 percent to Z$223 million on replacement cost pricing.

The trading period is characterised by inflationary pressures, reduced disposable incomes and acute shortages of foreign currency which necessitated frequent price increases.

Chairman Pearson Gowero said faced with these circumstances, the firm had to frequently review prices whilst considering consumer affordability.

“Consumer trends have shown a shift from premium and mainstream segments to value products in reaction to the erosion of disposable incomes. Performance of the spirit segment was negatively impacted by the prevalence of counterfeits and illicit alcoholic beverages,” he said.

In the inflation adjusted results, the company’s operating income increased by 15 percent to Z$62.74 million from Z$54.44 million in the comparative period. Again, this was attributed to the replacement cost pricing.

Cash from operations went down 40 percent from Z$52.01 million in the comparative period to Z$31.15 million.

Net cash funds on hand stood at Z$45.5 million.

“Most of this was awaiting foreign currency allocation at the banks to enable funding of external suppliers for business continuity,” Gowero said.

As expected due to the inflationary pressures in the market, administration expenses surged by 83 percent to Z$9.32 million from Z$5.09 million in the prior period.

Earnings per share was down 71 percent to Z$9.37 cents. After tax profit for the company declined from Z$37.9 million previously to Z$10.98 million.

The group’s balance sheet stood at Z$427.51 million, representing a marginal increase of 3 percent from Z$414.44 million. Afdis declared an interim dividend of Z$10.00 cents per share which amounts to Z$11.7 million.

Gowero said the future remained uncertain due to the ongoing forex shortages, hyperinflation and poor agricultural season.

“This will impact negatively on volume and margin performance,” he said.

He said Afdis would continue to explore strategies designed to best serve the market and ensure business continuity.

New Ziana