Afdis decries harsh economic operating environment
Spirits and wines maker, Afdis, says the group navigated a complex economic environment in the year ended March 31, 2024, to deliver a revenue increase despite facing stagnant sales volume.
According to the firm, revenue increased by 26 percent to US$51,8 million whilst operating income increased by 23 percent to US$6,6 million.
A marginal volume growth of 1 percent partly contributed to this revenue growth, according to the company.
The group highlighted a challenging landscape marked by a weakening local currency, high inflation and inconsistent power supply.
Afdis also grappled with increased competition from unregulated imports and illicit products from neighbouring countries added to the competitive pressures faced by the beverages maker.
The company also had to deal with numerous changes. One significant change was the company’s shift in functional currency to the US dollar in October 2023, aligning with IFRS Accounting Standards. This change, though necessitated by economic conditions, presented its own set of challenges in financial reporting and analysis due to exchange rate fluctuations and hyperinflation in the previous currency.
“It is important to highlight that the financial balances may exhibit notable disparities when viewed from a market perspective due to the disparities in exchange rates and the levels of hyper-inflation experienced during the period.
“While the conversion process is mathematically accurate, users of these financial statements are advised to exercise caution when analysing these balances, particularly those that were determined using the conversion of inflation adjusted numbers into US$,” said Afdis.
However, the transition to the US dollar provided a lifeline for Afdis, enabling increased access to foreign currency crucial for sustaining operations. Additionally, the company benefited from heightened activities in the mining and construction sectors, further bolstering its financial stability.
In terms of performance, Afdis reported a modest 1 percent growth in volume, attributed to challenges like cheaper imports and illicit products flooding the market. However, within its product segments, the Ready to Drink (RTD) category experienced a notable 5 percent growth, driven by enhanced product availability and consumer engagement initiatives.
Conversely, the spirit category saw a 2 percent decline due to heightened competition from low-cost and illicit alternatives, while the Wine segment remained steady compared to the previous year.
Financially, Afdis showcased resilience amidst the turbulent economic landscape, with revenue climbing by an impressive 26 percent and operating income increasing by 23 percent to US$6,6 million.
A profit before tax of US$9,7 million was recorded from US$3,6 million in the prior year comparative. Total comprehensive income came in at US$3,5 from a loss position of US$3,6 million.
These figures, however, come with a caveat—the shifts in currency and inflation-adjusted numbers make direct year-on-year comparisons challenging, underscoring the complexities faced by businesses operating in volatile economic environments.
Management at Afdis remain cautiously optimistic, acknowledging the inherent disparities in financial reporting post-currency conversion as well as the adverse impacts of the El Nino induced drought being experienced in the country.-ebuisnesswekly
