Tiger Brands will receive a 5.61 cents per share final dividend from its Zimbabwean unit, National Foods. The company on Thursday reported a 10% surge in pre-tax profits to US$19m, boosted by stronger performances in maize and beef feed volumes that propelled its sales tonnage to 560 000 tonnes.
National Foods is jointly owned by Innscor Africa Limited and South Africa’s Tiger Brands. It is a major food and stock feeds processing company in Zimbabwe, which has also now invested in an edible oil manufacturing company, Pure Oil.
The company is seeking to benefit from import restrictions on most commodities introduced by Zimbabwe recently. National Foods said its sales volumes for the year to end-June 2016 had surged by 13% over the prior period.
“Average selling prices declined by 7,3% due to increased maize sales in the mix, lower flour prices on account of lower wheat pricing and general price discounting to hold share in an increasingly competitive market,” said National Foods chairperson Todd Moyo on Thursday.
Zimbabwe has continued to be in deflation, with some economists saying it is a reflection of market correction owing to the country’s overpriced economy because of dollarisation, while others say the liquidity squeeze in the market is forcing companies to lower prices in a bid to push volumes.
The company saw revenues for the period rise by 5,2% to $330m and will now pay a final dividend of 5.61c/share to its shareholders, which include National Foods. Most companies in Zimbabwe are struggling for profitability and only a handful have been managing to pay dividends, as most have reported revenue and profit declines and losses.
Moyo said operating costs for the period rose by 4,9%, mainly as a result of its “go to market costs” in Zimbabwe’s “highly competitive and constrained market”. The company will now focus on cost optimisation.
By the end of the period, National Foods had a net cash position of US$1.9m while its net working capital stood at US$44.4m compared to US$42,4m last year. The company utilised capital expenditure of US$7.6m.
“The majority of this investment was directed towards the flour mills as well as a substantial investment in back-up generators.”
Zimbabwe is in the midst of power shortages that are set to worsen as Eskom and other suppliers have threatened to cut supplies over outstanding arrears. Electricity shortages have affected manufacturers, and most companies have to incur extra costs on high voltage generators to sustain production.-Fin24