Axia embarks on aggressive expansion drive

BUSINESS REPORTER

Publicly listed group, Axia Corporation Limited, is accelerating its growth strategy by expanding the store network of Transerv and TV Sales & Home, aiming to boost revenue, strengthen brand recognition, and extend market reach, Business Times can report.

Axia’s strategic business units have launched an aggressive initiative to open outlets in downtown and upmarket trading areas. The move is designed to tap into new customer segments, diversify risks linked to local economic fluctuations, and achieve economies of scale.

Chairman Luke Ngwerume said the group’s strategy to broaden its product range and increase market share remains firmly on track.

“The expansion of the store network at Transerv and TV Sales & Home continues to yield positive results, with the newer outlets performing well,” Ngwerume said.
“Across the group, we are pursuing growth opportunities in the furniture and automotive spares segments, while securing new agencies within our distribution division. Enhancing returns on shareholders’ equity remains a key priority.”

Ngwerume added that the company will focus on maximising returns from these investments while directing free cash flow towards expanding the debtors’ books in both businesses to support volume growth.

Transerv plans to roll out new stores in the coming months, with seven sites scheduled to open in the second half of the year, Ngwerume confirmed.

In the manufacturing segment, the group will prioritise productivity improvement and cost management. Synergies are expected from relocating Lounge furniture manufacturing operations adjacent to bedding production.

“We will manage material and operating costs while maintaining a flexible approach to procurement and sourcing, ensuring our products remain affordable and accessible,” Ngwerume said.

Financially, the group reported revenue of US$122.031 million for the period, a 22% increase from the prior year, driven by competitive pricing that boosted demand. Gross margin improved by 10%, reflecting market-aligned pricing strategies.

Operating expenditure rose by 15%, mainly due to increased staff overheads from the addition of new stores and other variable costs. The group recorded an operating profit of US$15.32m, a 4% increase compared to the prior period.

However, the distribution business faced significant provisions for credit losses due to challenges in customer credit performance within the formal trade sector, which tempered overall profitability. Profit after tax declined slightly to US$5.14m from US$5.294m, impacted by higher costs from the expanded store network.

The group also exited its investments in two joint ventures—Prodistribution (Private) Limited and National Foods Logistics (Private) Limited—for a total of US$3.028m, affecting equity-accounted profits in the current period.

Ngwerume emphasised that the group’s balance sheet remains strong. Current assets increased by US$6.450m, while borrowings fell significantly by US$5.361m, from US$15.977m to US$10.616m.

Net cash generated from operations surged to US$11.719m, a 239% increase over the comparative period, driven by higher festive season demand. This enabled capital expenditure of US$1.497m during the period. Following this strong performance, the group declared a dividend.

Looking ahead, disciplined execution and a customer-focused approach position Axia for stronger performance in the second half of the financial year. The group will continue to prioritise value creation and productivity enhancement.

“We are optimistic about delivering a productive second half and sustaining our growth momentum,” Ngwerume concluded.