African Distillers (Afdis) grew volumes and revenues for the full-year to the end of September despite volatility obtaining in Zimbabwe’s economy and characterised by currency and pricing uncertainty.
Zimbabwean beer brewer, Delta Corporation and Distell are major shareholders in Afdis, which raised volumes and revenues for the year to September 2024.
Afdis manufactures wines, spirits and ready to drink beverages for the Zimbabwe market.
“The company recorded volume growth of 11% compared to prior period mainly driven by Ready to drink (RTD) and Wine segments which grew by 22% and 13% respectively,” said Matts Valela, chairman of Afdis.
Afdis explained that the ready to drink alcoholic beverages segment had been “influenced by promotions and the successful launch of a new product” that had been well received by the local market. However, cheaply imported and illicit spirit products were wreaking havoc on this category.
“The wine category benefited from improved availability of affordable wines and intensified focus on direct sales distribution. The widespread distribution of cheaper and illicit spirits curtailed growth of the category,” added Valela.
The stronger volume performance during the year under review helped Afdis to a 7% revenue surge. Its revenues for the year to end September amounted to $26.2 million (around R460 million), although operating income at $1.5m was lower than prior year due to thinner margins from price reductions meant to counter competition from illegal imports.
Additionally, financial differences in approaches used in deriving prior year US dollar numbers for the company as well as exchange rate distortions and inflation indices during the same prior period made it “difficult” to compare operating income.
Afdis changed its functional and presentation currency to US dollar in the prior year. A change in presentation currency required comparative numbers to be restated, it said.
“The restated comparative figures may exhibit notable disparities when viewed from a market perspective due to the distortions in exchange rates and the levels of hyper-inflation experienced during that comparative period,” cautioned Valela.
During the year under review, Afdis said Zimbabwe’s economic environment was generally stable in the first quarter after the introduction of the new ZWG currency in April.
However, “there was significant depreciation of the local currency in the second quarter resulting in price distortions” in formal trade. A thriving informal sector has also intensified competition for formal businesses that are required to abide by monetary regulations.
“Most businesses encountered challenges in sourcing foreign currency from the banking system resulting in some disruptions in supply of goods and services,” said Valela.
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