Afdis applauds Govt over economic measures

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WINES, spirits and cider maker, African Distillers Limited, has praised Government’s efforts to stabilise the economy saying it remains optimistic that the falling inflation trajectory and exchange rate stability will be maintained. Afdis Chairman, Mr Matlhogonolo Valela said this in the statement accompanying the firm’s financial results for the half-year period to September 2023.

In response to the free falling exchange rate and high inflation in the first quarter, the Government instituted measures to promote the use of local currency in the economy.

The measures included allowing 100 percent retention of domestic foreign currency earnings, transfer of external payment obligations from the central bank to the Treasury, refining the foreign exchange auction system, and lifting of restrictions on importation of basic goods.

Interventions were also rolled out to promote the use of the domestic currency by Government agencies while gold coins and gold-backed digital tokens were introduced to provide alternative investment options for investors and mop up excess liquidity.

The measures were also complemented by the directive for all taxpayers to settle 50 percent of their obligations in foreign currency starting from the June 2023 Quarterly Payment Date (QPD) while interest rates were hiked to discourage speculative borrowing.

Since the Government started implementing the policy measures there has been a modicum of stability in the exchange rate and prices of goods and services across the economy.

“The company welcomes the efforts of the authorities to stabilise the economy and remains hopeful that the current stability in exchange rates and inflation can be sustained,” said Mr Valela.

He, however, noted that consumer demand was negatively impacted by currency-induced pricing distortions that continued to persist in the formal retail channel.

Mr Valela also said the informal traders benefited from the stable and competitive pricing, dominated by the US dollar and strong demand linked to the 2023 elections-related spending.

Operationally, volumes in Afdis spirit’s segment recorded an eight percent growth compared to the same period last year.

Wine volumes surged seven percent driven by increased market penetration during the second quarter. The Ready to Drink segment registered a 14 percent growth in volumes despite competition from lower-priced smuggled imports.

Overall, the firm recorded an 11 percent volume growth against the prior year’s comparative period, benefitting from good product availability across all key brands, intensified product distribution, and brand innovation.

“Management continues to focus on supplying its full range of products to the market, identifying opportunities to grow, defend market share, and improve profitability through product innovation, production efficiencies and cost control.”

The group’s revenue increased by 156 percent to $134 billion in inflation-adjusted terms, whilst operating income increased to $28,3 billion.

The group managed to declare an interim dividend of US$ 0,0030 per share, amounting to a total of US$355 882. – Herald