KEY POINTS
- TV Sales & Home boosted revenue by 14% with promotions.
- Zambia and Malawi saw declines due to currency issues.
- Restapedic volumes increased 30% with competitive pricing.
Axia Corporation Limited, a Harare-based group with operations spanning Zambia and Malawi, has reported mixed first-quarter results for the period ending September 30, 2024, amid challenging economic conditions in its operating regions.
According to its recently released report, the Zimbabwe-headquartered leading force in specialty retail and distribution, faced a tough first quarter, navigating inflation, currency depreciation, and intense pricing pressures.
Renowned for its strong foothold in household goods, appliances, automotive products, and fast-moving consumer goods, it experienced mixed performance across its business segments as each market posed unique challenges.
While certain divisions achieved growth, others struggled under economic constraints, with shifting conditions impacting both sales volumes and revenue growth in diverse ways across the region.
Segment performance overview
In Zimbabwe, Axia’s TV Sales & Home division saw a revenue increase of 14 percent, largely due to successful promotional campaigns like the “Winter Warmer” and birthday promotions that resonated with consumers despite high inflation.
The Restapedic brand recorded a 22 percent revenue boost and a 30 percent rise in volume, attributed to its competitive pricing that appealed to the price-sensitive Zimbabwean market.
Legend Lounge, however, faced a slight dip, with revenue down by 1 percent while maintaining stable volumes year-over-year. Transerv, Axia’s automotive retailer, posted a robust 25 percent revenue increase.
Growth was driven by a stronger credit portfolio, contributions from new store openings, and an expanding solar segment, despite a 4 percent decrease in overall volumes.
DGA Zimbabwe, one of Axia’s joint ventures, reported a significant revenue decline of 27 percent, largely due to a structural shift in sales reporting within a major joint venture.
Despite this, emerging partnerships with formal trade channels are starting to generate returns, offering a more positive outlook for future quarters.
In the regional markets of Zambia and Malawi, DGA Region faced continued currency challenges.
Zambia saw a 20 percent revenue drop in USD terms, though Kwacha revenue grew by 6 percent.
In Malawi, USD revenue fell by 13 percent, counterbalanced by a 17 percent growth in Kwacha terms as inflation weighed on consumer purchasing power.
Navigating economic challenges
In Zimbabwe, Axia contended with a volatile currency environment following the Reserve Bank’s devaluation of the Zimbabwe Gold (ZWG) currency against the U.S. dollar.
Zambia’s Kwacha continued to depreciate, while the Malawian currency stagnated amid high inflation, adding strain to Axia’s operations. The company’s CEO, R.M. Rambanapasi, noted the benefits of targeted promotions, which contributed to revenue resilience in some divisions despite broader economic pressures.
Axia’s leadership remains cautiously optimistic about regional economic recovery.
CEO Rambanapasi cited anticipated fiscal and monetary tightening in Zimbabwe as a potential catalyst for economic stability, which could improve Axia’s growth outlook across its divisions.
Management is also exploring expansion opportunities to enhance long-term growth, with a focus on bolstering resilience and capitalizing on promising segments.
Axia Corporation continues to monitor government policy developments in Zimbabwe and its neighboring regions, hopeful that these will provide a more favorable climate for growth.
The company’s strategic focus remains on leveraging expansion and promotional opportunities to navigate the economic headwinds impacting Southern Africa’s retail landscape.
