Dairibord Holdings Ltd says it has made capex investments in excess of US$31 million in the last five years, but does not anticipate further outlays on plant and equipment going forward with focus now on sweating investments made to date.
By Melody Chikono
Dairibord marketing executive Tracy Mutaviri told businessdigest in e-mailed responses this week her company has made major investments in ultra-high temperature cartonised plant, Steri plant, Maheu processing and filing as well.
“Total spent in the past five years was at US$31 million. Going forward, we don’t anticipate major investments in plant and equipment since we will be focussing on sweating the investments made to date,” she said.
Mutaviri said the majority of the investments were on capacity expansions which have seen capacity utilisation increasing to 49% in 2017 from 37% in 2016, adding that the capacity utilisation could have been higher had it not been for foreign currency challenges.
“Capacity utilisation increased from 37% in 2016 to 49% in 2017. Capacity utilisation could have been higher had it not been for challenges experienced in securing adequate foreign currency for sourcing imported inputs. This challenge has constrained our ability to produce at optimum capacity,” she said.
Mutaviri said the company has made significant milestones in its restructuring exercise with the manpower rationalisation resulting in reduction of manning level by 10%. The restructuring exercise, which started last year, is expected to result in reduction of costs by 10% with US$866 000 having been incurred as restructuring costs during the period.
Mutaviri said this target was achievable given the savings on a month-to-month basis. In its half year results, the company said overheads had declined by 8% in the same period prior year.
Dairibord narrowed its losses to US$846 588 in the half year June 2017 from US$1,8 million in the comparable period last year after aligning its overhead costs to revenue. According to Mutaviri, the loss reduction was attributable to the restructuring exercise .
“The narrowing of losses was wholly attributable to the restructuring exercise undertaken. The marginal increase in volumes did not have a significant impact since material costs also increased during the period. It should however be noted that restructuring costs of US$866 000 were accounted for during the period,” she said.
In line with the restructuring, Dairibord has relocated its head office from the CBD rented premises in the central business district to its own premises at the Rekayi Tangwena factory in Harare, while consolidation of the organisational and corporate structure have seen the successful integration of three operating business units (Dairibord Zimbabwe (Pvt) Ltd (DZPL), Lyons and NFB Logistics) into one entity with a unitary management structure.