Zebb Chakawa 
Kudzanai Gerede
Companies and Markets Editor
AXIA Corporation’s logistics business, Distribution Group Africa (DGA) is expected to put a strain on the group revenue for the current financial year ending June 30, 2025 (FY25) on account of widespread informalisation of the sector in Zimbabwe and foreign currency shortages in regional markets.
The business has operations in Zimbabwe, Zambia and Malawi and boasts of world class warehousing capability and vehicle fleets.
Over the years DGA has relied on exclusive relationships with many blue-chip brands including Colgate Palmolive, Pepsi, Johnson & Johnson, Tiger Brands, Unilever, Eveready, AVI International and Reckitt Benckiser.
However, according to financial analysts’ firm Inter Horizons (IH) Group, the rapid informalisation and currency depreciation in its flagship market, Zimbabwe has affected business volumes.
“DGA continues to face an uphill battle considering in-formalization and currency volatility, especially in the Zimbabwean market where retailers have bemoaned foreign currency shortages as well as stocking challenges which may persist in the short to medium term,” IH said in its equity research update on Axia Corporation’s FY24 earnings to June 30, 2024.
According to management, focus for DGA Zimbabwe is on gaining traction in the informal market while also making efforts to boost demand in the formal market through close partnership with retailers.
“Although management anticipates these measures will lead to recovery of the unit’s performance, we believe DGA will continue to hamstring the group’s topline growth to FY25.
We therefore forecast the group’s revenue to close FY25 at US$194,48 million, a marginal 0,3 percent growth weighted on by DGA’s performance,”
“We expect EBITDA margin to inch up as restructuring efforts begin to bear fruit in reducing costs and settle at 12 percent in the medium term. Net income is forecast to close FY25 at US$6,42 million.
Currency issues in the group’s markets remains a key downside risk to the business,” said IH.
DGA-Zimbabwe sales volumes for FY24 decreased by 45 percent, totalling 4,751,806 units by the end of the year.
This decline is partly attributed to a strategic restructuring by management during the year, where one of the distribution companies with significant agencies transitioned into a joint venture with a major supplier.
In Malawi, volumes remained relatively flat at 1,950,557 units in FY24 compared to 1,955,462 units in the prior year.
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