Axia profit up 64 percent
AXIA Corporation Limited (Axia) says profit surged 64 percent to $74,76 million in the six months ended December 31, 2019 from $45,42 million in prior period, despite inflationary pressures on costs.
The listed speciality retail and distribution group’s revenue was up four percent to $1,729 billion during the review period compared to $1,665 billion in comparable period.
Axia chairperson Luke Ngwerume said the group generated most of its revenue mainly from income earned on the derivative option, unrealised exchange gains on foreign denominated cash and cash equivalents as well as profit on disposal of subsidiary and other assets.
“The impact of price increases negatively affected demand thus turnover volumes were below those traded in prior year. An improved performance was noted in the last quarter of the half year, where volumes growth was better than that achieved in prior year,” he said.
Ngwerume said the group’s net borrowings increased by $18,909 million mainly as a result of increased borrowings to fund working capital, resulting in more effective gearing.
In the period under review, Axia generated cash of $25,97 million from operations, which was down 78 percent from the comparative period.
The company’s capital expenditure for the six-month period totalled $16,413 million and this was limited to critical maintenance and expansion projects as these were also affected by inflationary pressures.
Axia’s TV Sales and Home unit saw turnover declining by seven percent, while operating profit grew 122 percent.
However, volumes were 30 percent below prior period, although the business is witnessing a good volumes recovery post December 31, 2019.
“The drive to increase credit sales has paid off and resulted in the positive growth in a shrinking market. Collections on the debtors’ book have remained good. Inventory holding remains good and focus on local products continues to yield positive benefits as production costs remain lower than regional competition,” Ngwerume said
Zimbabwe Distribution Group Africa operating profit was up 73 percent while turnover was down 11 percent.
Volumes were 39 percent below prior year and the impact of the price increases led to a margin increase which was better than turnover growth.
Ngwerume said foreign currency shortages resulted in the business reducing its imported stock component due to the concomitant pricing pressures.
“The business is looking at measures of increasing volumes of locally produced products as best substitutes for some imported products as a way of recovering lost volumes,” he said.
Distribution Group Africa regional operations turnover went up 16 percent over prior year in US dollar terms.
Transerv volumes declined significantly by about 46 percent compared to same period last year.