Melody Chikono AXIA Corporation Limited says the continued shortage of foreign currency on the official auction system, coupled with market distortions, negatively affected the group’s operations, particularly on pricing and value preservation.
Despite the Reserve Bank of Zimbabwe (RBZ) maintaining high interest rates and curbing money supply, the group remains cautious of a further review upward of interest rates and their likely impact after the third quarter of 2022.
In its trading update for the Q3 ending March 31, 2022, the group said although the regional trading environment has been positive in Zambia and Malawi, significant pressure on access to foreign currency remained crucial to the attainment of its core business objectives.
“The Zimbabwean operating environment remains complex and with many distortions. We remain hopeful that progressive policies regarding money supply, the exchange rate and interest rates will be reinforced to foster stability in the market and gradual building of confidence,” the group said.
“The group remains focused on executing the expansion opportunities as previously advised. The group is hopeful that the increased gold output witnessed towards the end of the quarter as well as the tobacco selling season will improve foreign currency receipts to address foreign currency liquidity issues.”
During the period, the group performance was a mixed bag with TV Sales and Home delivering strong volume growth as the figure went up 24% compared to the same period in prior year.
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The firm volume performance was attributed to the increase in trading days in the current year compared to the prior year where major restrictions on social and economic activity were in effect, following the advent of the Covid-19 pandemic.
Year-to-date volumes jumped 15% from the same period in the prior year.
Despite major challenges in obtaining foreign currency to ensure optimum stocking levels at all times, Axia subsidiary and automotive spares retailer Transerv continued on its growth trajectory, registering a 13% uptick in volumes, while the quarter registered growth of 15% compared to the same period last year.
However, Axia’s distribution subsidiary, DGA Zimbabwe’s volumes slumped 22% compared to the prior year.
The DGA branch in Zambia recorded a 9% drop in the third quarter compared to the prior period, owing to the impact of termination of Johnson & Johnson agency as year-to-date volumes were 16% below the prior comparative period.
The DGA branch in Malawi, however, closed the third quarter 2022 with volumes 53% up compared to third quarter results in the prior year due to the introduction of new agencies, namely Clover and Unilever and good support from Colgate.
Year-to-date volumes were 55% above the prior period.