Trading Environment
Trading for most part of the third quarter was affected by depressed disposable incomes and currency uncertainty due to the much-awaited monetary policy. Our retail business succeeded in building demand, against a backdrop of exchange rate volatility which negatively affects pricing of goods. However, the distribution business struggled due to some customers being put on stop supply as a result of failure to settle their invoices within agreed terms. The regional trading environment was volatile in Zambia with increase in inflation as prices responded to the depreciation of the Zambian Kwacha. In Malawi, significant pressure on access to foreign currency remains crucial to attainment of our core business objectives.
TV Sales & Home
Third quarter performance was 1% up to prior year while volumes were 8% up for the same period. Year-to-date position was 4% above prior year on the back of a 11% growth in volumes over the same period. This is attributed mainly to our steadily growing store network as well as maintaining our brand as the trusted quality provider of household furniture and appliances. The rolling out of the bedtime specialty stores will continue into quarter four with another two stores planned before the financial year end. Our credit book remains solid and has been steadily growing and the default rate has been encouragingly very low.
Restapedic
The capacity we now have after the commissioning of our Sunway 10,000 bedding facility is very encouraging with monthly actual production significantly above prior year. Export sales remain subdued, and efforts have been made to find new markets to cater for the additional production capacity that is not able to be taken up by local demand. Revenue on a year-to-date basis is 35% up to prior year while volumes are 54% up. Third quarter performance was 26% up on comparable period last year while volumes are 52% up for the same period. Despite market driven challenges affecting demand, Restapedic remain focused to implement strategies to be ahead of the curve.
Legend Lounge
Revenues are 14% ahead of prior year on a year-to-date position, on the back of a 26% growth in volumes. Quarter performance was 11% up on prior year and volumes for the quarter are also 9% on the comparative period last year. The impact of changes on the sourcing of raw materials will improve quality as well as lower the cost of production. The business is also poised to introduce new varieties of modern suites to widen the product offering.
Transerv
The Company’s revenue is 10% up in Q3 FY2024 compared to Q3 FY2023 and YTD 2024 it is 9% up on prior year. The growth in revenue is attributable to increase in the store network. The introduction of credit sales and solar products to the portfolio of products, has helped in driving sales for the quarter. The Company continues to be a market leader in the automative spares retail business, as it continues to provide its customers with genuine quality products at reasonable prices, whilst ensuring that Transerv shops are easily accessible to customers in various locations throughout the country. Transerv is focused on continuous professional development of staff to ensure the business continues to offer value adding services to customers.
DGA Zimbabwe
Revenues in US Dollar terms on a year-to-date basis are 24% down on prior year on the back of a 46% decline in volumes. The depressed formal trading environment severely affected demand and key customers continue to face challenges in settling their invoices. This in turn has continued to hamstring DGA’s ability to churn out significant volumes. Third quarter performance is 17% down to prior year on the back of a 60% volume decline in same period. The business is also undergoing a restructuring exercise to streamline operations and ensure efficient support to key agencies.
DGA Region
In Zambia, revenue and volumes are 9% down on prior year on a year-to-date basis and third quarter revenues are 12% down on the same period last year on the back of a 30% volume decline. The market remains volatile and currency depreciation remains a key challenge while price increases are not sustainable in the market.
In Malawi, year to date revenues and quarter revenues are 29% and 10% respectively ahead of prior year as management have succeeded in their efforts to overcome the foreign currency shortages prevailing. Year to date volumes are 10% up compared to prior year. Continued depreciation of the Kwacha remains a key challenge.
Outlook
The Group is hopeful that the recently introduced monetary measures will bring stability to the operating environment and thus stimulate demand. Continued progressive policies regarding money supply, exchange rate and interest rates will foster stability in the market and gradually build Zimbabwe market confidence. The Group is focused on exploring the expansion opportunities available in the market.
By Order of the Board.
AXIA CORPORATION LIMITED
Prometheus Corporate Services
Company Secretary
15 May 2024
