Forex shortages hit Axia Corporation
RYAN CHIGOCHE
Listed diversified concern Axia Corporation has been severely hit by foreign currency shortages on the formal market needed to import critical raw materials.
In a trading update for the quarter to March 31, 2022, Axia said the operating environment remained complex with many distortions.
“…Shortages of foreign currency on the official auction system coupled by increased arbitrage and market distortions negatively affect the group’s operations through pricing challenges and value preservation as retail and distribution rank low on the auction allocation continuum.
“The group noted the desire by the authorities to maintain high interest rates and a tight lid on the money supply during the quarter. However, the group remains cautious to further upward review of interest rates and their likely impact post Q3 of the 2022 financial year.
“However significant pressure on access to foreign currency remains crucial to attainment of our core business objective,’’ reads part of the statement.
Although the group was affected by the macroeconomic conditions in the reported period it reported a volume growth in the majority of their divisions.
Volume at TV Sales & Home grew 24% compared to the same period in prior year with the performance attributed to the increase in trading days as pandemic restrictions were eased.
The improved performance was also driven by the refurbishment of the Mbuya Nehanda and Gweru Main stores, the company said.
At Transerv, volumes grew 15% compared to the same period last year despite major challenges in obtaining foreign currency to ensure optimum stocking levels at all times.
During the quarter, two retail shops in Victoria Falls and Chiredzi were opened.
A fitment centre in Chikwanha is ready to start trading soon. The Avondale fitment centre (formerly Autocycle) opened its doors to the public in the third week of April.
DGA Zimbabwe Year to date volumes were 22% below the prior comparative period and 21% below the same quarter in the prior year.
On the outlook the company Axia said it was looking up to the reinforcement of robust progressive policies that will stabilise the market as the company is on an expansion drive across all divisions.
“We remain hopeful that progressive policies regarding money supply, exchange rate and interest rates will be reinforced to foster stability in the market and gradual building of confidence. The group remains focused on executing the expansion opportunities as previously advised,” Axia said.
As the company embarks on an expansion drive, the TV Sales and Home division plans to expand its retail store footprint with three new stores scheduled to open in the Q4, one in Bulawayo and two in Harare.
For Transerv a fitment centre in Chikwanha is ready to start trading soon and before the financial year-end. The company is looking forward to opening more retail shops in Bindura, Karoi and Zvishavane.
