adminAfdis gross sales for the period under review reached US$8 661 364 while excise duty amounted to US$1 290 105.
Customs duty is levied on imported goods in terms of the Customs and Excise Act (Chapter 23:02) while excise duty is levied on certain locally manufactured goods in terms of the same Act. The applicable rates of duty depend on the category of goods.
Afdis said the fact that excise duty for the local products was being charged on the retail price posed a disadvantage for local manufacturers.
“Excise duty is levied at cost on imported product whilst the locally produced product is charged at selling price. This is a distinct competitive disadvantage for a local manufacturer,” said Afdis in their financial report.
The company, however, remained optimistic that the “current excise anomaly will be resolved shortly”.
The company’s cost of sales amounted to US$4 891 244 which, added to distribution costs, administrative and other expenses, resulted in a profit of US$401 834.
The company also said gross operating margins during the period were under pressure, attributable to a general shortage of disposable income translating into slow volume growth and a predominance of sales in the low-priced product category.
In addition to the tight margins and low volumes, the company’s cash generation was restricted by challenges in respect of debt collection. They also noted that although sales volumes were 130 percent ahead of figures of the prior year, a comparison with parallel 2008 period was not indicative of any significant growth in view of the hyperinflationary trends that prevailed in that year.
In terms of outlook, Afdis said it would seek to boost its market share, and enhance its relationship with its principals resulting in the “establishment of a full range of regionally and internationally branded products to complement the local product”.
derick.khumalo