Afdis to localise imported brands Delta Corporation chief executive Mr Matts Valela

Nelson Gahadza Senior Business Reporter

African Distillers Limited (Afdis) says it will focus on localising some of its brands as well as explore revenue and profitability growth opportunities through product innovation, riding on a stable operating environment.

Afdis manufactures, distributes and markets branded spirits, ciders and wines in the Zimbabwe and export markets.

Group chairman, Matlhogonolo Valela, said plans were underway to invest in capital projects to localise production of some imported products such as 4th Street, which is mainly imported from South Africa.

“This will ensure enhancement of shareholder value and reduced foreign currency requirements,” he said in a trading update for the six months ended September 30, 2021.

Mr Valela added the company’s investments would ride on the operating environment, which is expected to largely remain relatively stable.

“Management will continue to explore growth opportunities and expand market share as well as improve production efficiencies and cost containment,” he said.

In terms of trading performance, volumes for the period under review increased by 66 percent over the same period last year.

Mr Valela said the ready to drink segment volumes grew 116 percent compared to the prior period, achieving the largest growth of the three group’s categories.

“This was largely attributed to improved availability of ciders,” he said. Wines and spirits grew by 88 percent and 34 percent respectively.

Mr Valela noted that the company continued to observe the presence of cheap and illicit spirits in small packs.

On financial performance, revenue increased by 55 percent to $2,6 billion compared to $1,7 billion in the comparable prior year period, whilst operating income declined to $226 million.

In historical cost terms, revenue increased by 187 percent to $2,4 billion whilst operating income increased by 47 percent to $480 million.

“The slower growth in operating income is as a result of cost normalisation, increased distribution and Covid-19 related expenses while growth in both inflation and historical terms was due to firm demand which resulted in higher volumes,” Mr Valela said.

He also noted that the ability to trade in foreign currency by the business, though constrained, helped sustain business operations.

The group closed the period with a net cash on hand of $174 million. The board recommended an interim dividend of $70 cents per share, amounting to $83,6 million.

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