DAIRIBORD Zimbabwe Ltd’s revenue surged 14% in the half year ended June 30 2012, buoyed by the positive performance of its food and beverages portfolio and in spite of high costs of production, erratic supply of utilities and increasing competition from imports.
Revenue grew to US$48,6 million from US$42,2 million in the same period last year, spurred by a 14% growth in sales volumes for food and beverages and a 3% growth in milk sales.
Significant growth in food and beverages sales volumes was driven by increased capacity following investment in Nutriplus and Cascade equipment, which was commissioned last year.
Revenue growth by product portfolio was 24% for food, 16% for beverages and 4% for milks.
Raw milk intake went up 5% to 12 889 million litres, with Zimbabwe recording a 9% increase and Malawi 7%.
In the period under review, Dairibord posted an operating profit of US$4,3 million, up 20% compared to US$3,6 million last year.
Net cashflows from operating activities went up by 479% to US$1 million despite liquidity challenges in the economy that have negatively impacted on consumer demand.
Basic earnings per share grew 35% to US$0,88, compared to US$0,65 last year.
In a statement attached to the company’s financial results, chairman Leonard Tsumba said business in Malawi continued to be affected by foreign currency shortages and restrictive retention polices.
“In May 2012, the Malawi kwacha (MWK) was devalued by 49% to MWK250 to the US dollar, exerting pressure on costs.
“Year-on-year inflation, which was at 9,8% at the end of December 2011, closed the month of June 2012 at 20,1%, eroding the purchasing power of customers,” said Tsumba.
“The exchange losses arising from the devaluation in Malawi, amounting to US$1,1 million, are accounted for in the statement of comprehensive income,” the chairman pointed out.
Tsumba said the group was still in the process of disposing of Mulanje Peak Foods in Malawi.
In Zimbabwe, the group’s investment in ME Charhons was sold for US$1 million to Cairns Holdings Ltd.
Going forward, Tsumba said the group would focus on tight cost management and intensifying marketing efforts, among other measures to improve profitability in the current year.