BY Tanyaradzwa Nhari
ZIMBABWE Stock Exchange-listed wine and spirit maker African Distillers Limited (Afdis) has had to frequently change the price of its products due to foreign exchange volatility.
The previous year was characterised by the economy experiencing COVID-19 restrictions that stifled performance.
In a statement accompanying the company’s financial results for the year ended March 31, 2022, Afdis chairperson Matlhogonolo Valela said the volatile exchange rate had resulted in the rapid fall of the Zimbabwe dollar on the parallel market.
He added that the rate, which had galloped past the $400 mark, affected its pricing mechanism.
“The operating environment for the reporting period was relatively stable except at the end of the financial year when the economy experienced significant foreign exchange rate volatility,” he said.
“Resultantly, value chain costs increased necessitating frequent price reviews.”
Due to the COVID-19 pandemic, he said, the importing of glass from South Africa was negatively impacted, thereby affecting the ability of the company to meet the demands of the economy.
However, the company was able to sustain itself by trading in foreign currency which is stable in comparison with the local currency.
The profit recorded for the year was $7,2 million (inflation adjusted) compared to the previous year loss of $7 million (inflation adjusted).
Afdis’ volumes increased by 36% compared to prior year. This was as a result of an increase in Wine and Ready to drink (RTDs) that grew by 65% and 50% respectively although the overall growth of the RTD was affected by supply shortage.
“In the last quarter of the year, growth in the RTD segment was severely curtailed by the regional shortage of glass which led to supply shortage with the Hunters’ brand being the worst affected,” said Valela.
Valela said efforts were underway to widen the glass supply base to minimise product shortage in future.
Afdis will continue to face price competition since the industry is flooded with wine and spirit making companies.
“The business is investing in new capacity to improve efficiencies and reduce production costs while engaging relevant authorities to address compliance issues,” he said.
Revenue for the year under review increased to $8,7 billion (inflation adjusted) up from $4,8 billion (inflation adjusted) in the prior year.
For the operational year 2021 the assets of the company were recorded at $4 billion in comparison with the preceding year where the assets were at $3,2 billion.
The company has plans that will help mitigate the effects of the volatile economy that will result in an operating environment which is conducive for doing business.
Capital projects to localise some imported products are at an advanced stage of implementation.