Spirits and wine maker, African Distillers (Afdis) says demand for its products during the half-year period ended 31 December 2017 was firm, but due to foreign currency challenges the company experienced inconsistent product supply in the market.
In a statement of the financials, the company’s chairman Pearson Gowero said as a result of the intermittent shortages, total volumes declined 5 percent and this was despite a 2 percent growth in the ready to drink (RTD) segment.
“The spirit segment continued to be dominant contributor to total revenue, followed by RTDs and wines. Of significance is the whisky category which grew 7 percent, aided by the newly introduced Golden Blend Black,” he said.
During the period under review, revenue was up 18 percent to $16,47 million compared to $13.98 million in prior year same period. Cost of sales, however, increased to $7,69 million compared to $7,40 million in 2016 same period.
Gowero said due to value chain management and product mix, trading margins improved 6 percent while operating income rose 62 percent to $4 million.
The company incurred a foreign exchange loss of $0,4 million due to the firming South African rand compounded by the delay in settling foreign creditors occasioned by foreign currency shortages. However, Finance income of $0,1 million earned from short term investments partly mitigated the loss.
As a result, cash balances increased by $9 million to $13,1 million driven by delays in settling foreign obligations.
The company is optimistic that the current momentum by Government to seek foreign investment wills ease the doing of business.
“Management will continue to seek opportunities to improve market share and profitability while maintaining consistent supply of products,” he said, adding that the initiatives will be anchored on product innovation, production efficiencies and cost control.
Afdis declared an interim dividend of 0,40 cents per share. During the period, the company remitted taxes amounting to $7,5 million.