Distell: Zimbabwe unit’s turnover drops - Zimbabwe
IOL Business - Feb 15th 2016, 09:48
Harare - Distell’s unit in Zimbabwe declared an interim dividend of 0.15 US cents (2.36 SA cents) yesterday, despite an 8 percent decline in turnover that was partly offset by a 2 percent rise in wine and cider beer volumes as Zimbabweans switch to cheaper alternatives.
Zimbabwe is experiencing an economic downturn that has seen volumes for most companies take a knock and profits slide. This has been evident in the lager beer category, where SABMiller unit, Delta Corporation, has recorded declines over the past few quarters.
African Distillers (Afdis), which is jointly owned by South Africa’s Distell and Delta Corporation, yesterday said, “Cider and wine volumes continue to grow” in an economy where disposable incomes are declining and companies are cutting costs.
Although its spirits segment was lower, wines and ciders registered volume growth of 27 percent and 19 percent, respectively. The company competes in the Zimbabwean market with other imported brands, mostly from South Africa and other regional and international producers.
Pearson Gowero, the chief executive of Afdis, said that the rand’s fall had also helped gross margins improve.
He attributed the 19 percent decline in operating income “to the decline in revenue and insignificant gains realised from asset disposals” compared with the previous contrasting period.
“The decline was compounded by price reductions effected during this period aimed at stimulating demand and maintaining competitiveness. Gross margins improved due to value chain cost interventions as well as the depreciating rand,” he said.
However, turnover for the period declined 8 percent to $19 million, while operating income tumbled by 19 percent to $2.1m. This was despite sales volumes increasing by 2 percent to 3.9 million litres in a difficult market where consumer-spending power has been dented by job losses, company closures and the rising cost of living.
As a result, per share earnings in the company for the period fell to 1.38 US cents from 1.74 US cents in the year-earlier period, translating to a 0.15 US cents interim dividend. Payments to the government, through taxes, increased by $1m to $7.5m.
In yesterday’s trade on the Zimbabwe Stock Exchange, Afdis was 0.24 percent weaker after closing the day’s session at 50 US cents. However, analysts at brokerage firm Lynton Edwards said, “Turnover was up on yesterday (Wednesday – 10 Feb) buoyed by Afdis and Econet to $410 000.”
Foreign sales for Afdis stock amounted to $10 000 while there were no foreign purchases in the counter. There were no foreign sales in Delta while foreign purchases came in at $21 000.From © Independent On-line 2016. All rights reserved.
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