Axia Corporation in decent Q3 performance
The third quarter ending March 31, 2024 proved very challenging for Axia Corporation, with trading significantly influenced by depressed disposable incomes by most consumers and currency volatility.
Said the group in a trading update: “The anticipation of a new monetary policy added to the uncertainty, impacting consumer spending and overall economic stability.”
Axia’s retail business showed resilience by managing to build demand despite the exchange rate fluctuations that adversely affected pricing strategies. In contrast, the distribution business faced hurdles, primarily due to customers being unable to settle invoices within agreed terms, leading to stop supply situations.
“Regionally, Zambia’s trading environment was particularly volatile, marked by rising inflation as the Zambian Kwacha depreciated. Similarly, in Malawi, access to foreign currency remained a significant challenge, crucial for achieving the company’s core business objectives,” Axia said.
TV Sales & Home demonstrated a modest yet positive performance in the quarter under review.
Revenues were up by 1 percent compared to the prior year, with an 8 percent increase in volumes for the same period. Year-to-date figures were more encouraging, showing a 4 percent increase in revenues and an 11 percent growth in volumes.
This success is attributed to the steady expansion of the store network and the brand’s reputation for quality household furniture and appliances.
The rollout of bedtime specialty stores continues, with two more stores planned before the fiscal year ends. The credit book remains robust, with low default rates indicating strong customer creditworthiness.
Restapedic’s performance in the third quarter was marked by significant growth following the commissioning of the new Sunway 10,000 bedding facility.
Year-to-date revenue is up by 35 percent, with volumes increasing by 54 percent as the third quarter alone saw a 26 percent revenue increase and a 52 percent rise in volumes compared to the previous year.
“Production levels have surged, surpassing those of the previous year. However, export sales remain subdued, prompting efforts to explore new markets for the additional production capacity not absorbed by local demand,” the group said.
Legend Lounge also reported positive results, with year-to-date revenues 14 percent ahead of the previous year, supported by a 26 percent growth in volumes.
Third quarter revenues were up by 11 percent, with a 9 percent volume increase compared to the prior year.
According to the group, changes in raw material sourcing are expected to enhance product quality and reduce production costs as the business plans to introduce new varieties of modern suites to expand its product offering, positioning itself to better meet customer preferences.
DGA Zimbabwe, reported a challenging third quarter of 2024 with revenues in US dollar terms on a year-to-date basis down by 24 percent compared to the previous year.
“This decline is attributed to a 46 percent drop in volumes, driven by a severely depressed formal trading environment and persistent difficulties among key customers in settling invoices,” the group said.
The third quarter alone saw a 17 percent decrease in revenue and a significant 60 percent decline in volume compared to the same period last year.
According to the group, the substantial drop in demand has hampered DGA Zimbabwe’s ability to maintain high production levels and in response, the company has embarked on a restructuring exercise aimed at streamlining operations and enhancing support for key agencies.
Axia Corporation’s regional operations reported mixed results for the period under review, DGA Zambia experienced a decline, with year-to-date revenues and volumes down by 9 percent from the previous year.
“Third quarter revenues were 12 percent lower than the same period last year, reflecting a 30 percent drop in volumes. The Zambian market continues to face volatility and significant currency depreciation, making price increases unsustainable and posing ongoing challenges for the business,” the group said.
Conversely, DGA Malawi posted positive results, with year-to-date revenues and third quarter revenues up by 29 percent and 10 percent respectively compared to the previous year.
“This improvement is largely due to effective management strategies that have mitigated the impact of foreign currency shortages. Additionally, year-to-date volumes in Malawi rose by 10 percent. However, the continued depreciation of the Kwacha remains a critical challenge for the company,” Axia said.
Looking ahead, Axia Corporation is cautiously optimistic about the future, the group believes that the recent monetary measures introduced in Zimbabwe will bring much-needed stability to the operating environment, potentially boosting demand.-ebusinessweekly
