Cereal shortages, Dollarised Pricing Dent CFI profits

CFI HOLDINGS posted an operating profit of US$407 091 for the interim period ending March 31 2009.


The group however recorded a loss after tax of US$45 896 arising from fair value loss in listed investments of US$461 556 and losses incurred on fair valuation of biological assets of US$1,2 million.

“This was as a result of a reduction in biological assets stock due to constraints emanating from cereal shortages during the first quarter of the year and general decline in dollarised pricing levels during the period under review,” said CFI Holdings chairman Simplicius Chihambakwe.

During the period under review the group said it was expecting to finalise the acquisition of an equity stake in Hubbard South Africa which breeds chickens in the current reporting season.

“Economic measures introduced in February resulted in the full dollarisation of the economy and extensive liberalisation of the economy.”

“Among measures undertaken to adapt the group’s various businesses to the new environment the group’s focus has been dedicated to recapitalising the business, alignment of overheads to throughput and improving products quality and pricing competitiveness in light of increased competition from imports,” Chihambakwe said.

Since the onset of dollarisation this year, the group’s various business concerns have witnessed slow but steady improvements in capacity utilisation.

The group’s businesses remain fundamentally sound and while business pick-up has been slow, CFI said it was encouraged by its performance.

The conglomerate is involved in the manufacturing of animal feeds, flour, maize products and irrigation equipment. It is also involved in retail trade and property management. CFI Holdings has retail, poultry and other specialised divisions.

The retail division which consists of Farm & City, Town Country and Honey Dew Farm experienced shortages of locally manufactured products.

Import substitutions were hampered by inadequate foreign currency resources for borrowing purposes from local financial institutions.

The poultry division consists of Agrifoods, Agrimix, Hubbard Zimbabwe, Glenara Estate, Crest breeders International, Suncrest and Vetco.

“Several cereal shortages were experienced in the first quarter of the financial year. Towards the end of January 2009 government scraped the Grain Marketing Board’s monopoly on procurements and marketing of agriculture products. This measure is beneficial to both farmers and producers alike,” said Chihambakwe.

“The move will benefit the poultry division significantly through an improvement in planning certainty and operational efficiencies going forward. Our broiler production resumed shortly after the above measures were put in place,” he added.

CFI said the group was affected by cheaper imported dressed chickens at a time when the industry was working on uplifting production levels.

“Our production levels posted during the interim period continue to increase and we expect poultry products to become pervasively available in the local market going forward,” said Chihambakwe.

The group’s specialised division consists of Victoria Foods, Dore and Pit and Maitlands Zimbabwe.

BY PAUL NYAKAZEYA

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