20 August 2018

Zimbabwe: Dairibord Net Profit Up 131pc

Dairibord Zimbabwe Holdings overturned a loss position with 131 percent in net profit to $269 844 during the half year to June 30, 2018 from a loss of $846 588 in the same period last year on volumes growth and restructuring.

Its regional subsidiary, Dairibord Malawi posted a loss for the period of $293 000 on depressed performance.

Earlier this year, the group indicated the board was assessing the Malawi unit after it continued on a perennial loss making performance, which weighed down the group's earnings.

At $50,8 million, revenue for the period was 15 percent above same period last year.

The group achieved a 6 percent growth in volume to 41 million litres on increase in demand.

Basic earnings per share improved by 145 percent to 0,10 cents from negative 0,22 cents in the comparable prior year period.

Total assets decreased by 6 percent to $67,9 million.

Volumes of high value lines like condiments, ice creams and cartonised fun and fresh recorded significant growth over prior year.

"Demand was firm across all categories, however, growth in volumes sold was constrained by supply challenges for both packaging and raw materials for the majority of the group's product lines," said chairman, Josphat Sachikonye in a statement accompanying the group's financial statement.

Export revenues grew 15 percent to $616 000, which helped the company meet its foreign currency requirements although this still remained low compared to its monthly foreign currency needs.

Management, however, anticipates its export initiatives to be fruitful and help contribute to the company's earnings.

Net cash outflow from operations improved to $765 000 from prior period outflow of $1,25 million on the back of improved operating performance and collections. However, tightening of trade terms by suppliers and investment in inventories negated the overall cash flow performance.

During the period under review, raw milk intake was 12 percent above prior year levels.

"The improved intake benefited from enhanced milk supply strategy which is anchored on recruitment of more farmers, herd growth and productivity improvement at farm level," said Mr Sachikonye.

The growth in milk intake will benefit market share for the liquid milks category and reduce dependence on imported milk powders, which are expensive and difficult to secure given the foreign currency challenges.

Although foreign currency remains a challenge for businesses, a sustained economic growth is anticipated which will also benefit the dairy industry.

Dairibord did not declare a dividend.

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