eBusiness Weekly
Michael Tome Business Reporter
AXIA’s subsidiary, Distribution Group Africa (DGA), says it is looking at growing production of locally manufactured products as substitutes for cheap imports that are flooding the market.
DGA houses various leading brands such as Colgate, Kellogg’s, Johnson and Johnson, Tiger Brands, Rhodes, Unilever, Nestle, Probrands, Probottlers , Irvine’s and Prodairy.
The group controls the vast supply chain of several commodities, particularly to major retail chains such as OK Zimbabwe and Pick n Pay.
In the Axia’s half year results ending December 2019, DGA acknowledged that there was growing “competition in the market from independent traders” who continue to supply the same range of imported products.
This is threatening the country to become a net-importer of numerous basic commodities.
With that new drive of “increasing volumes of locally produced goods”, the group alluded that it will also be directing its focus towards refining the delivery service of its merchandise to all corners of the country.
“The shortage of foreign currency resulted in the business reducing its imported stock component due to the concomitant pricing pressures. The business is looking at measures of increasing volumes of locally produced products as best substitutes for some imported products as a way of recovering lost volumes,” said company chairman Luke Ngwerume in a statement accompanying the group’s financial results.
In the period under review DGA indicated that its revenue went down 11 percent compared to the prior period, while operating profit closed the period 73 percent in the positive compared to the previous stint.
Volumes uptake was 39 percent lower than the relative period in 2018 attributable mainly to price increases, which did not match the disposable incomes of the significant chunk of the working population. In the regional operations, DGA recorded modest results as turnover surged by 16 percent in US dollars terms over prior year attributable mainly to the acquisition of new agencies like Nestle and Blue Band in Zambia and the addition of Pro Group in Malawi.
The company indicated that it was encouraged by the improved regional performance despite high levels of stock write-offs in Zambia.
On the other hand, TV Sales and Home (TVSH) closed the period under review with a 122 percent growth in operating profit stemming from pricing that matched the spiking inflation levels. The home appliances retail firm attributed improved revenue to increased credit sales, which buoyed the company’s performance in this “shrinking market”.
TVSH volumes uptake for the period, however, slumped 30 percent from the prior period figures leading to a 7 percent decline of turnover.
TVSH furniture making division restapedic produced decent volumes and the company says it is investing in a new plant and machinery equipping itself for export markets.
