Axia Corporation reports profit increase, defies e...

Axia Corporation reports profit increase, defies economic headwinds

Nyashadzashe Ndoro

Axia Corporation, a leading Zimbabwean retailer of furniture, electronics, and automotive parts, defied a challenging economic environment to report a 7% increase in profit after tax for the half-year ended December 31, 2023.

Despite a 4% decline in revenue compared to the prior year, the company managed to grow its profit margin and generate strong cash flow. This resilience was attributed to volume growth in key business units like TV Sales & Home and Transerv, which offset a decline in the Distribution business.

The positive performance comes amidst a difficult operating environment in Zimbabwe characterised by foreign currency shortages, a depreciating local currency, and depressed consumer demand. Axia highlights these challenges, including a 27% devaluation of the Zimbabwean dollar and delays in settling foreign currency bids.

"The exchange rate depreciated by 27% during the half year amidst constrained liquidity and pricing distortions in the market, which negatively impacted consumer demand across the formal sales channel during the period. The Group was affected by delays in the settlement of the bids on the foreign currency auction. The auction market was also closed on the 16th of December 2023 with the Group still having unsettled auction payments," the group said.

The company, however, points to bright spots like a successful expansion of its Transerv auto parts stores, with eight new stores opened in Harare during the period. Additionally, TV Sales & Home saw a 6% revenue increase and a 58% volume increase in its bed manufacturing unit, Restapedic.

Looking forward, Axia remains cautious but optimistic. The company hopes for a more market-driven foreign currency exchange regime and disciplined government policies to foster stability. The group said its focus will be on managing debt levels, expanding their product range, and controlling costs while generating free cash flow.

Axia has also declared an interim dividend of US$0.0018 per share, payable to shareholders on record as of April 19, 2024. This demonstrates the company’s confidence in its financial performance despite the economic headwinds.