ZIMBABWE – In the six months to June 30, 2022, Dairibord Holdings, Zimbabwe’s leading manufacturer and marketer of food, dairy and beverage products, returned to profitability moving up 231% to ZWL$688.60m from a loss of ZWL$525m incurred in the prior comparable period.
The performance was largely driven by firm demand for the company’s products as overall sales volumes for the period grew 11% ahead of the same period last year.
Foreign currency accounted for 40% of total sales volume, with 8% going to export markets, while 32% went to local markets.
The company also saw an increase in the contribution of non-milk product categories as beverages dominated the sales volumes at 62%, food 10% and with the share of liquid milk to total volume 28%.
As a result of the volume growth, revenue for the period increased by 40% to ZWL$17.12 billion driven by price adjustments to preserve margins.
As milk processors’ intake in the country increased by 17% to 38.96m litres from 33.42 million litres in the previous period, the company made use of 12.29 million litres that is 32% of total processor intake.
Liquid Milk’s contribution to total volume was 28%, Foods 10%, and Beverages 62%. This affirms the growing contribution of non-milk product categories and product portfolio diversification, in line with our “more than just milk” strategy.
During the period under review, the group experienced significant cost increases on account of imported inflation and price volatility arising from exchange rate movements.
Cost of sales grew by 37% in inflation-adjusted terms, driven by sharp increases in material costs and utilities.
Overheads grew by 30%, however, at a rate lower than revenue growth, benefitting from management’s cost containment initiatives.
Resultantly, the group’s operating profit grew 140% to ZW$1.26 billion compared to ZW$524 million in the prior year. The operating profit margin for the period was 7% up from 4% in the prior period.
After accounting for finance charges, foreign exchange losses, and other incomes, the group posted a profit before tax of ZW$1.1 billion.
Looking ahead, the dairy processor is seeking to commission a new plant by year-end, a move that is expected to drive the company’s growth strategy.
The company’s board chairman, Josphat Sachikonye, said the group’s main thrust was on volume growth to close the gap between demand and supply in most product categories and cost containment.
“The growth will be largely driven by the beverages and foods, benefitting from the commissioning of plant and equipment for additional processing capacity in the third quarter of the year,’’ Sachikonye said.
He said the group would also focus on realignment of its route to the market to increase cash receipts, local US dollar sales, and exports.
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