ZIMBABWE Stock Exchange (ZSE) listed wines and spirits manufacturer, African Distillers Limited (Afdis), has reported a 6% growth in volumes in the first four months of the current financial year compared to the same period last year, management has said.
MD Cecil Gombera told businessdigest on the sidelines of the company’s annual general meeting on Wednesday that the business was looking at maintaining an average 6% growth on volumes at the end of the current financial year compared to an 18% volume growth in the year ended June 30 2015, after the company commissioned a new ciders plant.
“In the first quarter, we were 6% up in terms of volume from last year and we are obviously looking at extending that.
But if we can get to half year or end the year at a growth of 6%, we would have done very well,” said Gombera.
“Currently, we have gone through the first quarter or shall I say the first four months of the year and we are 6% up.”
He however said revenues for the four months were to a large extent flat on last year, as volumes are growing ahead of revenues due to market pressures that have forced players to cut prices.
This comes after the company in its Fy15 annual financial report said volumes grew ahead of turnover due to increased contribution of the relatively lower priced ciders and targeted market place price interventions taken in order to protect market share.
The company said consumers are leaving brands to get more value for the dollar.
A trading update given by Gombera at the close of formal AGM business indicated the company has plans to strengthen the spirits business through ongoing investment in value for consumers and initiatives that will support operational efficiencies.
On the nature and quantum of investments, Gombera told businessdigest the company will be investing in labelling equipment that will give a new look to the Hunters and Savanna ciders, as well as refrigeration and transport equipment.
“Part of the investment will be used to purchase refrigerators and coolers and we have a programme to make sure the product gets to the consumer in the best manner,” said Gombera.
The company will use working capital to finance the minor projects.
This comes as the company is pushing to pay its debts for a period of 12 months after the date of the AGM as listed in the notes for a special business item on the agenda in respect of a share buyback scheme that was approved at the meeting.
The company wants to clear its debt, currently hovering around US$1,3 million, and keep new debt at a “bearable minimum”.
Going forward, Gombera said, the company was also looking at cost control and improving efficiency.
He said in the four months under review, the ready to drink business grew by 40% after local production of ciders.
Ciders grew by 56% while the wine category is also expected to grow.
The company’s spirits business is expected to grow by 22% in the current year.
In Fy15, Afdis reported a US$3,1 million after tax profit, up from US$2 million prior year after revenues grew significantly to US$3,8 million from US$2,9 million the previous year.