AFRICAN Distillers Limited profit after tax declined to $1,6 million compared to $1,9 million for the half-year-ended December 31 2015 due to a decline in revenue as consumers shifted to lower priced products.
BY VICTORIA MTOMBA
In a statement accompanying the group’s financial results, Afdis board chairperson Pearson Gowero said the economy remained subdued, characterised by deflation and shrinking employment which resulted in diminishing consumer spending power.
“This has impacted negatively on the business particularly in the second quarter. The spirit business recorded a decline in volumes against last year, however cider and wine volumes continued to grow registering an increase of 27% and 19% respectively,” he said.
Revenue for the group went down to $12,7 million from $13,7 million recorded in the same period in 2014 despite volumes growing by 2% to 3,9 million litres.
He said the consumer spending patterns continue shifting towards the lower priced products and the growth in ciders was to lower the value per litre when compared to the previous period.
Operating income was down by 19% to $2,1 million due to the decline in revenue and insignificant gains realised from asset disposals when compared to the previous period.
Gowero said although the trading environment was expected to worsen the company, continues to identify revenue growth opportunities to improve profitability.
He said initiatives anchored on existing customer base, current distribution network and product innovation include planned new product launches, brand extensions and retail price strategies.
He said the cost containment measures were expected to contribute to improve profitability. Afdis declared an interim dividend of 0,15 cents per share payable in respect of all qualifying ordinary shares of the company.
The company recently said the depreciation of currencies in Malawi, Mozambique and Zambia has affected the company’s export initiatives.
The company said it would reduce its exports as the United States Dollar is strong against the regional currencies which means it becomes expensive for the company to export.
Zimbabwe adopted the multicurrency system in 2009 and most transactions are conducted in United States Dollars which makes Zimbabwean products expensive and less competitive than regional products.