VICTORIA Falls Stock Exchange-listed conglomerate, Padenga Holdings Limited struck an optimistic note this week, saying targets for 2022 would be met despite a depressed crocodile skin market.
The firm, whose interests stretch to gold mining, has had to respond to shifting customer tastes, as it builds one of the region’s biggest crocodile rearing and skin processing operations targeting the world’s most lucrative markets.
In its annual report for the year ended December 31, 2021 Padenga said a higher proportion of skins were now consigned to lower-tier markets because of more stringent selection.
The industry continues to be depressed because of oversupply and a contraction in the second and third tier markets.
Padenga chairperson Thembinkosi Sibanda said during the period, the group pursued fresh initiatives to eliminate scarring during the life of a crocodile.
“These have yielded extremely positive outcomes and give promise of a significant improvement in future skin quality,” the Padenga chairman said.
“When achieved, this will place the great majority of Padenga’s skin production into the sector of the market where demand continues at positive prices. These trial initiatives are being implemented across the enterprise from 2022 onwards. We therefore expect significantly improved quality in skins to be harvested in future. Early season harvesting is on budget and skin quality is consistent with expectations. We anticipate meeting our annual sales target and a return to profitability for this division in 2022,” he said.
Sibanda said the group anticipated the positive trajectory to persist for a minimum of four to five years.
While the quality of skins produced in 2021 improved significantly, the Padenga boss said low demand and low sales volumes would result in below-par financial results for the firm’s crocodile skin operation.
“Management are re-evaluating options for this unit, including mothballing until market conditions justify a restart. We remain confident in our strong fundamentals and we will continue to focus on preserving value while managing the risks triggered by the volatile external environment. The group will return to profitability in 2022,” he said
During the period the group recorded a turnover of US$78,5 million, a 10% increase over the US$71,6 million recorded during the prior comparable period.
Dallaglio, the firm that houses Padenga’s mining interests, contributed 66% to the group’s revenue during the period.
This contribution was significantly higher compared to a 57% contribution during the year ended December 31, 2020.
Padenga said Zimbabwe crocodiles contributed 31%.
It said its Texas crocodile (called alligator in the US) operation contributed 3%, down from 5% in the previous year.
The solid group revenue performance was largely driven by the exceptional contribution from the mining operations.
This followed the on-time commissioning of the new Eureka Gold Mine in Guruve in October 2021.
The Eureka Gold Mine achieved its plant nameplate capacity seven weeks earlier than forecast on the 25th of November 2021. The group recorded earnings before interest tax depreciation and armotisation of US$15,1 million during the review period, compared to US$23,7 million the previous year.