Axia optimistic about long-term prospects

20 Mar, 2020 - 00:03 0 Views
Axia optimistic about long-term prospects Luke Ngwerume

eBusiness Weekly

Enacy Mapakame
While economic headwinds are expected to persist in the near future, retail and specialty distribution group, Axia Corporation remains upbeat about its operations as it leverages on its strength as a dominant distributor and speciality retailer with wide branch networks countrywide.

Under the current challenging operating environment, quick adaptability, cost containment measures as well as ability to generate foreign currency remain key survival strategies for businesses.

For Axia, management has indicated it will continue to evaluate opportunities that enable sustainable growth while preserving and growing shareholder value. These will be essential for the remainder of its financial year and in the long term.

“The group is optimistic about the long-term prospects and growth potential of the country, in spite of the current economic challenges,” said chairman Luke Ngwerume in a statement accompanying the Group’s financials for the half year to December 31, 2019.

“The board is confident that the Group’s businesses will withstand the current harsh economic environment and will be able to deliver a good performance in the remaining half of the financial year.

“This, however, will definitely require the right structures and processes that will allow the Group to quickly adapt to environmental changes and leverage on the Group’s strength as a dominant distributor and speciality retailers with wide branch networks countrywide,” he said.

Axia’s main operating businesses units are TV Sales & Home, Distribution Group Africa (DGA) and Transerv.

TV Sales & Home is a leading furniture and electronic appliance retailer with sites located countrywide while DGA’s core areas of expertise lie in inbound clearing and bonded warehousing, ambient and chilled warehousing, logistics, marketing, sales and merchandising services.

While the prevailing economic headwinds have resulted in a significant erosion of disposable incomes, Axia’s wide branch network across the country places it in a better position and market reach. The group recently opened new branches in Rusape and Victoria Falls for TV Sales & Home.

It is also expected to cash in on the Legend Lounge — a lounge suit manufacturing business, in which it owns 70 percent.

The group entered into a partnership with Legend Lounge and will also focus on growing a market for its manufactured products both locally and regionally.

On the other hand, DGA houses various leading brands such as Colgate, Kellogg’s, Johnson and   Johnson, Tiger Brands, Rhodes, Unilever, Nestle, Probrands, Probottlers, Irvine’s and Prodairy.

The group controls the vast supply chain of several commodities, particularly to major retail chains such as OK Zimbabwe and Pick n Pay.

During the half year to December 31, 2019, inflationary pressures posed challenges on the Group’s operating costs and working capital, with respect to stock inputs.

Its business units were, however, resilient and proactive despite these factors and this helped the group to record a fair performance.

Total revenue came in at $1,729 billion during the period representing a 4 percent growth on the comparative period.

Said Ngwerume: “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.”

Axia sustained growth in profitability as operating profit grew 129 percent to $209,9 million, despite the inflationary pressures on costs.

Basic earnings per share and headline earnings per share improved by 19 percent and 15 percent respectively.

The group generated cash of $25,97 million from operations which was down 78 percent from the comparative period.

Capex for the period closed at $16,413 million and this mainly limited to critical maintenance and expansion projects as these were also affected by inflationary pressures.

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