Reduction in average selling prices drives National Food’s revenue

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    Harare – Agro processing concern, National Foods Holdings Limited revenue for the year ended June 30, 2018 slightly increased by 3 percent from 289.508 million to 297.929 million, buoyed by sales volumes in wheat and maize which countered an average portfolio selling price decrease of 5 percent.

    In a statement accompanying the company’s financial results, Chairman Todd Moyo said the key Flour, Maize and Stockfeeds units all saw declining selling prices for a variety of reasons.

    “In Flour, selling prices declined by 2.5 percent due to the inability to increase prices against a largely static bread price.

    “Stockfeed prices declined by 5.3 percent, as a result of an increased proportion of lower priced beef feed, as poultry volumes declined following the Avian Influenza outbreak. In the Maize category, selling prices reduced 15 percent due to a significant reduction in raw maize prices as the country was self-sufficient in maize for the first time in many years.”

    In the period under review, total gross margin dollars increased by 2.7 percent compared to last year, with a mixed performance across the various categories.

    Flour margins declined substantially, reducing by 22.2 percent in absolute dollars per ton in comparison to last year.

    Resultantly, volume for the year increased by 7.1 percent compared to last year, reaching 543 000 metric tons.

    The increase was largely driven by Flour division where volumes increased by 28 percent, the highest in the company history.

    Maize volumes grew by 11 percent, while there were volume reductions in stockfeed of 13 percent on the back of Avian Influenza outbreak and rice 25 percent due to foreign currency constraints.

    Improved and more robust consumer demand was evident in the second quarter increasing by 33 percent over the previous year and positive growth being registered across all of the operating units.

    Moyo said international wheat prices rose during the year and these increases could not be recovered in flour prices due to the delays in agreeing the increase in bread pricing with Government.

    “Whilst an increase in bread price was agreed toward the end of the period, the margin impact of this has subsequently been largely eroded by further inflationary pressures. The viability of the mill-bake value chain remains severely challenged and it is imperative that the sector works with Government to find a sustainable solution of both industry and the consumer.”

    He said margin across the remaining categories largely met expectation, in dollar per ton terms stockfeed margins increased moderately, whilst maize margins measured on the same basis were flat.

    During the period rice margins improved on the back of relatively well priced raw materials in the first half.

    Operational expenditure increased by 2.3 percent to $47.95 million compared to the same period last year.

    Excluding costs relating to the discontinued Depots incurred in the early part of last year, costs increased by 7.6 percent versus the prior period.

    Additionally, Moyo said towards the end of the financial year, inflationary increases were seen in distribution costs (warehousing and delivery costs), driven by increased fuel and vehicle maintenances costs, and to a lesser extent plant repair and maintenance costs.

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