The Herald (Harare)

Zimbabwe: Dairibord Profits Up 14 Percent

DAIRIBORD Holdings Limited's after-tax profits for the full year to December 2011 increased by 14,4 percent to US$7,1 million, driven by high volumes and improved margins. As a result, the company's earnings per share increased by 11,9 percent to US1,97c on the back of a 28 percent growth in revenue, which at US$95 million, was near the forecast levels.

Chief executive Mr Anthony Mandiwanza said the group was targeting US$100 million worth of sales by the end of last year.

Dairibord attributed the volume growth to better capacity utilisation after the company had invested significantly in plant and new product machinery to enhance operational efficiencies. The company invested US$6,2 million on capital projects, including the Cascade processing plant, commissioned in the first half of last year, and the Nutriplus plant, commissioned in the third quarter of last year.

A new yoghurt plant was commissioned in the third quarter of last year while two packing lines for Chimombe milk were installed in the last quarter to minimise repairs and maintenance costs.

More commercial vehicles were acquired to improve the group's distribution capacity.

Dairibord chairperson Mr Tim Chiganze said: "Sales volumes increased by 20 percent over 2011, driven by 15 percent growth in beverages, 19 percent (growth) in foods and 26 percent growth in liquid foods."

To further enhance volumes, efficiencies and profitability, the group mobilised US$4 million, at 11 percent annual interest, from the PTA Bank for recapitalisation and settlement of short-term loans.

A total of US$10 million is earmarked for capital projects in the current financial year.

The company said raw milk intake increased by 16 percent over the year. Malawi operations recorded a 26 percent growth in volumes while Zimbabwe operations registered 13 percent increase. But overall group profitability was weighed down by poor performance in an associate company, M.E. Charhons Limited, whose loss worsened to US$512 362 from US$200 503 in 2010.

Mr Chiganze said Dairibord has since resolved to exit the associate, which has been weighed down by protracted plans to raise the money needed to give the firm a new lease of life.

Zimbabwe Stock Exchange-listed Dairibord said it would exit Mulanje Peak Foods, which it controlled indirectly through Dairibord Malawi, due to its inability to grow and become profitable. But the group increased its stake in Dairibord Malawi from 60 percent to 68,4 percent. Other shareholders, National Investment Trust of Malawi and the workers, hold 22,8 and 8,8 percent respectively.

Looking ahead, the group expects to reap benefits of increased volumes, plant efficiencies and better margins this year due to last year's capital investments in plant and machinery.

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