Nelson Gahadza, Senior Business Journalist
African Distillers Limited (Afdis) said it will focus on localizing some of its brands and explore opportunities for revenue growth and profitability through product innovation, building on a stable operating environment.
Afdis manufactures, distributes and markets spirits, ciders and branded wines in Zimbabwe and in export markets.
Group chairman Matlhogonolo Valela said plans were underway to invest in investment projects to locate production of some imported goods such as 4th Street, which is mainly imported from South Africa.
“This will ensure improved shareholder value and reduced foreign exchange requirements,” he said in a business update for the six-month period ended September 30, 2021.
Mr Valela added that the company’s investments will depend on the operating environment, which is expected to remain largely relatively stable.
“Management will continue to explore opportunities for growth and expand market share as well as improve production efficiency and cost containment,” he said.
In terms of sales performance, volumes for the period under review increased by 66% compared to the same period last year.
Mr. Valela said ready-to-drink segment volumes increased 116 percent from the previous period, achieving the strongest growth of the group’s three categories.
“This was largely attributed to the improved availability of ciders,” he said. Wines and spirits grew by 88% and 34% respectively.
Mr. Valela noted that the company continued to observe the presence of cheap and illicit spirits in small packages.
Regarding financial performance, revenue increased 55% to $ 2.6 billion from $ 1.7 billion for the same period of the previous year, while operating profit fell to 226 millions of dollars.
In terms of historical costs, revenue increased 187 percent to $ 2.4 billion while operating income increased 47 percent to $ 480 million.
“The slower growth in operating income is the result of the normalization of costs, increased distribution and expenses related to Covid-19, while growth in inflation and historical terms was due to firm demand which has resulted in increased volumes, ”said Mr. Valela.
He also noted that the company’s ability to exchange foreign currencies, while limited, helps support business operations.
The group ended the period with net cash of $ 174 million. The board of directors recommended an interim dividend of 70 cents per share, amounting to $ 83.6 million.