Afdis reports a strong operating performance

Published: 10 June 2013

Afdis reported a strong operating performance showing a 22% growth in sales volumes to 3.2m litres. Local production increased by 21% to 1.7 million litres and accounted for 62.9% of total revenue. Gross sales grew 16.0% to $16.7 million. EBITDA margins expanded to 13.2% from 11.2% enhanced by improved efficiencies as well as improved sales mix.

Nonetheless, increased finance costs resulted in reduced profitability. Net finance charges increased as borrowings grew and exchange gains declined by 92% to just $52,913. The company managed to pay off the ZAR denominated liability. We estimated that adjusted PBT (excluding exchange gains) grew by a healthy 27% to $1.3 million on the back of the strong operating performance and margin expansion.

Cash generation was constrained on high working capital requirements and finance costs. Net gearing deteriorated to 41% from 27% at year-end. Inventories increased by 71% from year end to $4.8 million reflecting peak trading period in December. Cash sales accounted for approximately 20% of group sales.

Distribution has been enhanced by establishing depots and working with wholesalers. Management report that packaging for the company's product portfolio was recently enhanced and well received by the market. In addition new products are being developed. Volume growth is expected to accelerate as the company ramps up local production.

Depending with the outcome of the agricultural season another peak might occur around March. Per capita consumption remains low in Zimbabwe at approximately a fifth of a litre suggesting tremendous growth potential off a low base. Imara Stockbrokers said the group is well positioned for an economic turnaround with its strong brands and distribution network and they are advising their clients to buy the stock.
- Byo24News

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