HomeBusiness DigestAfdis sobers up — turns to profitability

Afdis sobers up — turns to profitability

SPIRITS maker Afdis overturned a loss in the year to June 30 after a strong growth in sales volumes. Sales volumes grew 28,3% to 4,7 million litres at US$25,701 million.

Report by Staff Writer
The group has now repositioned itself after the huge costs of climbing out of hyperinflation and the strategic focus will remain on production efficiencies and entrenching market leadership.
Revenue in the period was at US$19,54 million after taking out US$6,154 million, which the company paid out in excise duty and grants.

In a statement accompanying the results, Afdis said that capacity utilisation grew by 29% to 41%.

The brown spirits have been profitable and growth in the line would see margins maintained or improved.  The gross margin increased 2% to 31%.

Operating income in the period was US$1,16 million while the group’s pre-tax line was US$1,66 million from a loss position of US$972 171.

The group reported a net profit of US$1,14 million from a loss of US$932 200 last year leading to earnings of 1,20 US cents per share.

Afdis did not declare a dividend saying that growth is still being restricted by working capital constraints.

“We expect this position to remain until the extended supplier credit position is normalised at the end of September,” the company said in a statement attached to its financial results.

The company said it will need further capital expenditure to complete basic upgrades to the company’s production facilities in order to meet the expected increase in demand.

The company has installed generators and sunk boreholes at its 30-acre property in Mt Hampden in order to supplement dwindling power and water supplies.

In terms of operations, 90% of the company’s product range is manufactured in Harare while the majority of its wines and ciders are imported from overseas.

Retail outlets account for around 80% of Afdis sales, with a significant proportion of the remaining volume being supplied to small-scale outlets, beerhalls and hotels. Afdis also exports to neighbouring countries like Zambia and Mozambique, although high tariffs mean that exports have become less of a priority for the company — accounting for 5% of its total volume.

The company’s real strength lies within the domestic market, where the Afdis brand is well known for consistently high-quality, world-class products.

In terms of competition, there are at least seven established companies while three are backyard because of the low entry barriers since all that was needed was the brand, quality and a manufacturing licence.

There were also threats from people who import spirits and collectively take a significant portion of the market share.

However competition had just taken only 10% of the cane spirits, brown spirits were on 80% and wines were on 70%.

Recent Posts

Stories you will enjoy

Recommended reading