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Nqobile Bhebhe, Senior Business Reporter

VICTORIA Falls Stock Exchange (VFEX)-listed company, Axia Corporation Limited, says it posted an operating profit of $10,396 billion in the last six months to 31 December representing a 16 percent increase on the comparative period while commending the clearing of the foreign currency auction backlog.

It said the clearing of the backlog has brought renewed confidence in the facility buttressing it as a reliable source of foreign currency.

That would enable it to pay its foreign suppliers, the firm said in its latest trading update for the six months to 31 December.

In January, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya said the central bank had cleared the backlog as a result of improved foreign currency inflows.

More than US$3,7 billion has been channelled to the market since the inception of the foreign currency auction on 23 June, 2020. Delays in settling accounts of successful bidders within the stipulated 14 days was beginning to unsettle the market.

Group chairman Mr Luke Ngwerume also noted that the downward revision of the local currency interest rates from 200 percent to 150 percent will assist in managing its working capital position which will allow for greater supply of goods at more affordable prices as well as stimulate volumes growth.

On the financial performance, he said the group reported revenue of $75,555 billion during the period to achieve a 44 percent growth compared to the comparative period.

“The revenue growth filtered into gross margin which increased by 36 percent on prior period. Operating expenditure increased by 54 percent on comparative period due to indexing of cost base to the US$.

“The Group posted an operating profit of $10,396 billion, representing a 16 percent increase on the comparative period.”

Profit before tax of $15,030 billion was reported, which was 78 percent ahead of prior year, while basic earnings per share and headline earnings per share both improved by 61 percent.

Mr Ngwerume further noted that the firm’s financial position remained solid with net borrowings decreasing by $278 billion mainly due to high interest rate increases during the period.

The Group generated cash of $8,362 billion from operations which, however, was three percent down from the comparative period.

It noted that positive free cash generation enabled it to incur capital expenditure for the period totalling $2,7 billion. The free cash generation will enable it to execute exciting expansion opportunities.

Mr Ngwerume said the second quarter volume performance for TV Sales and Home, which was up 22 percent compared to the same period in prior year, was attributable to successful market activation promotions namely Black Friday and Ho-Ho-Home which were well received by consumers.

However, year-to-date volume performance increased by three compared to prior year.
The reintroduction of US dollar credit has seen significant growth in the US dollar debtors’ book which increased by 382 percent between September 2022 and December 2022 with the potential to improve revenue streams in the last half of FY2023.

Collections on the debtors’ book have remained solid, he added.
Mr Ngwerume said as customer demand continues to increase, the business is leveraging on recently proposed policy changes such as the review in lending rates to boost the local currency credit sales which had been negatively impacted by high finance costs in the past year.

The group plans to increase its Transerv store network by opening two retail stores in Harare.
“Plans are underway to open at least six shops in the 2023 financial year as the business continues with the drive to lead the market and ensure that customers continue to access quality products while enjoying shopping convenience.”