Afdis positioned for further growth
Spirits and wines producer, African Distillers Limited (Afdis) on Wednesday reported a fivefold increase in historical revenue to $1,9 billion in July this year from prior year comparative.
“So the business is well positioned to continue exploiting opportunities for further growth,” managing director Stanley Muchenje told shareholders at the company’s annual general meeting.
He said the company was not spared from the effects of new policy announcements. In May 2022, the country announced that banks had been banned from lending in a bid to stem the precipitous decline of the local currency. After an outcry, the ban was later upheld.
“We also saw the temporary suspension of lending facilities which gave access rather than constrained access to working capital for most businesses,” he said.
“The effect of that was that most suppliers then began to demand prepayment, and that’s a challenge that still persists in the environment that we operate.”
Afdis managed to continue operating and generating foreign currency from trade, which allowed the firm to access important raw materials.
Despite the harsh operating environment, Mr Muchenje said there is some “underlying resilience in the economy, which allows us to have opportunities for growth.”
He said the 4th Street brand is getting traction and is much more available across the market.
“So the business is well positioned to continue exploiting opportunities for further growth,” he said.
In the outlook, Mr Muchenje said the main aim is to sustain business growth through market penetration.
“That talks to the route to market where we are going to ensure that we take a lot more of our direct service distribution to the peri-urban rural markets as well as urban markets which have been served largely by wholesalers,” he said.
He noted that growing the customers that they already service is key.
The company is going to invest in the PET line.
Ms Lydiah Mutamuko, the company’s secretary in a trading update for the quarter to June 30, 2022 said volumes grew 18 percent compared to the same period prior year, benefiting from improved supply into the market and increased outdoor activities as the Covid-19 restrictions were relaxed.
“Management continues to implement various initiatives focusing on revenue and profitability growth. Product innovation, market share protection and cost containment will enhance shareholder value,” she said.
Afdis has been focusing on localising some of its brands as well as exploring revenue and profitability growth opportunities through product innovation.
Some of the products localized for production included the 4th Street which was mainly imported from South Africa.
The company, as part of its strategy to streamline costs, commissioned a US$1 million cider plant for its Hunters Dry and Hunters Gold brands which will use inputs sourced locally.
“We look forward to commissioning it this quarter. It will afford us the opportunity to produce our affordable range cheaper and access more customers,” Muchenje added.
The AGM endorsed $14,3 million paid as directors’ fees for the past year’s audit as well as the remuneration of $23,7 million paid to Ernst & Young Chartered Accountants. -The Herald
