Volumes at Restapedic declined by 20%
Shortages of forex impacted importation of key raw materials
Axia has a 60% controlling stake in Restapedic
Restapedic manufactures beds for local and export markets
Harare- The diversified retailer listed on the US dollar denominated bourse Victoria Falls Stock Exchange, Axia Corporation Limited has succumbed to delayed disbursement of foreign currency on the auction market during the half-year ended 31 December 2022 resulting in dampened volumes performance in its Restapedic unit.
Axia acquired an additional 11% shareholding stake in Restapedic a local bed manufacturing company bringing its controlling shareholding stake to 60%.
Volumes at the Restapedic unit which falls under TV Sales and Home decreased by 20% compared to the same period in 2021.
Delayed foreign currency disbursements harmed the unit's efficacy to meet both local and regional demand due to intermittent raw material supply gaps.
“Restapedic experienced intermittent raw material supply gaps attributed to delays in the auction payments, this harmed the imports supply chain, resulting in the downturn in volumes during the second quarter,” the Company’s chairperson, Luke Ngwerume said in a statement accompanying the half-year financials.
“The business could not meet the demand in the second quarter.”
This further delayed the construction of the new bedding factory in Sunway City, Harare, the factory which is expected to open in March this year.
This is despite utterances by the Central Bank’s governor, John Mangudya that the auction market became more vibrant and efficient during the second half of 2022.
In 2022, US$1.1 billion was allotted on the foreign exchange auction, representing 91% of the total bids submitted, giving a deficit of 9%.
However, the 91% succumbed to delays that lasted for more than four weeks. According to the Foreign Exchange Auction Rules, funds must be settled within 14 days from the date of the auction.
However, despite the disbursement delayals, the auction market remains one of the key sources of foreign currency for companies.
Since the introduction of the auction system in June 2020, cumulative allotments amounted to US$3.7 billion as at 31 December 2022 with the share of the MSMEs sector increasing from 17% during the first half of 2022 to 22% in the second half of 2022.
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