Listed spirits and wines producer, African Distillers (AfDIS), reported a 988 percent rise in inflation adjusted profit after tax in the six months ended September 30, 2023, helped by an increased topline, setting a promising tone for the rest of the fiscal year.
AfDIS earned $22,38 billion in profit after tax.
Revenue increased by 156 percent to $134 billion, while operating income rose 311 percent to $28,3 billion.
A rise in US dollar transactions has also been reported by listed firms, despite the government’s insistence on setting pricing in local currency with the option to convert them to US dollars using the official exchange rate.
“In USD, turnover for the half year was at US$25,7 million,” Matlhogonolo Valela, the company’s chairman, said in a statement accompanying results.
“Revenue growth in both inflation adjusted and historical terms was driven by the higher volume, favourable sales mix and replacement cost-based pricing while operating profit increased due to volume growth and strict cost containment measures.”
In the half year, volumes, which are seen as a key indicator of demand, surged by 11 percent on account of good product availability across all key brands, intensified product distribution and brand innovation.
“Spirits category grew by 8 percent leveraging on the premiumisation of the Whitestone brand and firm demand on the affordable range,” he said.
“Wine volume grew by 7 percent driven by increased market penetration in the second quarter. Ready to Drink segment registered a growth of 14 percent despite competition from lower priced smuggled imports.”
While there was constrained ZimDollar liquidity and relatively steady prices in the second quarter, he said the operational environment under review was characterised by high inflation and an unstable exchange rate, especially in the first quarter.
“Consumer demand was negatively impacted by currency induced pricing distortions in the formal retail channel,” he said.
However, calls for the formalisation of businesses continue to grow louder as the formal sector feels the pinch from the emergent informal economy in the country.
“The informal trade benefitted from the stable and competitive pricing in US dollars. Consumer spending was also spurred by the election related activities.”
The government recently extended the multi-currency regime’s tenure by a further five years, from 2025 to 2030.
“The company welcomes the efforts of the authorities to stabilise the economy and remains hopeful that the current stability in exchange rates and inflation can be sustained.
“Management continues to focus on supplying its full range of products to the market, identifying opportunities to grow, defend market share and improve profitability through product innovation, production efficiencies and cost control,” he said in his outlook.
The board has recommended an interim dividend of US$0.0030 per share, amounting to US$355,882