Afdis to leverage on generated forex, new plant

Spirits and wine maker, African Distillers Limited (Afdis), says it will continue to leverage on foreign currency generated from trading to cushion itself against imported inputs shortage and supply chain costs.

The company has over the years faced pressure from rising costs and access to foreign currency and a growing illegal market.

However, as part of the company’s strategy to streamline costs, it commissioned a US$1 million cider plant for its Hunters Dry and Hunters Gold brands, which will use inputs sourced locally.

Afdis in a trading update for the quarter ended December 31, 2021, saw revenue increasing 57 percent and 52 percent for the quarter and nine months respectively, whilst in historic terms grew 148 percent and 159 percent for the same periods comparable.

“This is as a result of volume growth emanating from firm demand over the festive season.
The Company continues to leverage on foreign currency generated from trade to ensure continuous supply of imported inputs and to contain supply chain costs,” Afdis said in a statement.

The company noted that the trading environment for the quarter under review was stable and the relaxation of Covid-19 lockdown restrictions resulted in increased economic activity.

The firm added that consumer spending was further improved by increased activity in the key sectors of the economy such as agriculture, mining and infrastructure projects.

“The country however experienced a fourth wave of Covid-19 towards the tail end of the quarter which resulted in some disruptions to business operations as it led to higher employee absenteeism during periods of high infections.

“Foreign currency generated from trade continues to benefit the economy as it makes it easier to fund external supplies of raw materials and capital equipment,” Afdis said.

In terms of volume performance, the Company registered a volume growth of 32 percent for the quarter and 48 percent for the nine months compared to the same prior year period.

During the quarter, wine volume grew by 67 percent mainly driven by 4th Street due to improved availability and affordability following the local production project which was commissioned in the quarter under review.

“Spirits and Ready to drink (“RTD”) volumes grew 17 percent and 41 percent respectively.
The growth in these categories was curtailed by supply constraints caused by glass pack shortages in the region,” said Afdis.

The Company said it will continue to benefit from the growth in key sectors of the economy despite the high inflation, depreciating exchange rate and the Covid-19 effects.

“Management will continue to focus on strategies that grow market share and consequently enhance shareholder value,” it said.

The company on the other hand noted that the country is still experiencing high numbers of Covid-19 infections, and the full impact of the pandemic remains uncertain.

The spirits and wine maker said the Company continues to implement Covid-19 mitigatory measures in order to ensure business continuity.-eBusiness Weekly