THE Covid-19-induced national lockdown has affected Padenga Holdings’ skin sales in Zimbabwe with revenue expected to fall to US$24,73million in FY20, from US$25,53 million.
Government imposed a national lockdown on March 30 this year to curb the spread of the novel coronavirus pandemic which has claimed more than 300 lives in the country.
IH securities in its analysis of Padenga Holdings FY2020 results, anticipated a marginally higher average price per skin for FY20 for the crocodile business given the new harvesting strategy implemented in Q120.
“Despite higher selling prices, we anticipate the Zimbabwean operations will contribute US$24,73 million to the total revenue in FY20, flat from US$25,53 million because of a decrease in volume of skin sales following lockdown restrictions,” IH noted.
In the US market, 75% of skins produced annually are for the watchband skin market. Watchband skins are oversupplied in the market and prices have dropped off. Only farms with access to eggs/hatchlings at low prices are viable at these prices. Depressed demand for alligator skins is likely to impact prices.”
Profitability is also projected to be compromised in FY20 as the operation cleared out the last of its stock impacted by double scale.
“The alligator business is expected to produce 6% more skins in FY20, from 17 176 in FY19 to 18 149 leading to a forecasted revenue contribution of US$3,01 million, down from US$3,59 million,” IH said.
Post the reporting date, lifting of travel restrictions in October allowed for 18 629 crocodile skins to be graded and invoiced, while the high-end leather goods market made a strong recovery in sales across Asia, as lockdown restrictions eased in that area.
The company is on a diversification drive, spurred by an ongoing shift in the industry towards curbing the use of exotic skins by increasing the standards for environmentally sustainable husbandry practices. The drive commenced with the business purchasing a 51% stake in mining group Dallaglio at the end of 2019.
Padenga is also carrying out a feasibility study into plantation cropping of avocados and macadamia nuts.