SPIRITS and beverages producer African Distillers Limited has recorded 56% revenue growth to ZW$41 billion in inflation-adjusted terms for the year ended 31 March 2023, up from ZW$23 billion recorded in the same period last year.
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Despite operating in an environment characterised by high inflation, prohibitive interest rates and increased power supply outages, the company registered growth in revenue due to the increased volumes.
“Revenue growth was driven by increased volume. Cost containment measures were in place over the period. However, cost pressures were experienced in distribution, fuel and power, payroll and maintenance,” said the company chairperson Matts Valela.
In 2022, businesses were hit by inflation, which peaked at 285%, the highest interest rate standing at 200% together with long hours of load shedding affecting production.
“Measures introduced by the government to reduce ZW$ liquidity resulted in relatively stable foreign exchange rates except at the tail end of the year where accelerated depreciation was witnessed resulting in increased value chain costs,” he said.
The company spent ZW$1.3 billion on distribution costs, ZW$1 billion on administrative expenses and other operating costs, which include fuel and power. Regardless, operating income increased by 15% to ZW$5.4 billion.
Volume growth was strong at 18% above prior year, mainly driven by the ready-to-drink segment, which grew by 23%. Wine and spirit volumes grew by 16% and 14% respectively.
“The increase in volume was due to improved product availability, increased market penetration and promotional activity,” he said.
The spirits company registered ZW$1.5 bil[1]lion in net profit in the period under review, a decline from the ZW$2.1 billion recorded in March 2022. The company’s major shareholder and partner, Distell Limited, was recently acquired by Heineken Beverages.
The transaction was completed on 26 April this year. With Distell’s prestige within the wine and spirits categories, Heineken’s position in Africa is expected to be reinforced, gaining traction with its popular products such as the Amarula brand, Hunter’s and Savanna ciders.
Valela said although acquired by Heineken, Distell Limited was not completely divorced from African Distillers.
“The Company continues to receive support from Distell in line with the existing franchise and technical arrangements. It is anticipated that no adverse changes will arise from the acquisition,” said Valela.
The company anticipates business growth as it will continue leveraging on ensuring full product availability, market share protection and brand portfolio expansion, focusing on production efficiencies and cost containment initiatives.
The board recommended a final dividend of US$0.0050 per share, amounting to US$593 137. An interim dividend of US$0.0025 per share was paid in December 2022, bringing the total dividend to US$0.0075 per share.
