Inputs shortages kicks in as Dairibord volumes plunge

0
85
  • Sales volumes for the first quarter ended 31 March 2020 were 19% below the same period in 2019
  • Foreign currency revenue grew by 68% to US$1.018 million during the period under review thereby contributing to cost reduction
  • In regard to the COVID-19 impact, the Dairibord said that volumes in the second quarter are expected to be lower than Q1

Harare – Zimbabwe’s largest milk producer and processor, Dairibord Holdings’ sales volumes for the first quarter ended 31 March 2020 were 19% below the same period in 2019 with liquid milks, foods and beverages declining by 11%, 20% and 23% respectively.

In a trading update for the period under review the Group stated, “The decline was a result of the combined impact of shortages of inputs and depressed demand on some lines”.

During the period under review, raw milk production on the farms was affected by cost and availability of feed resulting in a 5% decrease for the Company’s intake compared to the same period last year.

Meanwhile, revenue for the period in inflation adjusted terms grew by 5% above prior year attributed to product mix and price adjustments in line with inflation.

“Operating margins remained under pressure due to persistent cost increases,” the Company said adding that these were mitigated by cost reduction and efficiency measures deployed which resulted in an operating profit margin of 7% compared to 4% recorded in the same period last year.

The Company reported that foreign currency revenue grew by 68% to US$1.018 million during the period under review thereby contributing to cost reduction.

The Company’s business has not been sparred by the impact of the coronavirus (COVID-19) pandemic on world economies which has brought a halt in production and reduced output form business operations.

The Dairy industry was declared among essential services by the Government amid the nationwide lockdown and therefore continued in operation throughout the lockdown periods, albeit for limited hours.

In regard to the COVID-19 impact, the Dairibord said that volumes in the second quarter are expected to be lower than Q1 as the company’s routes to the market have been constrained during the lockdown due to the restricted opening hours of modern trade and the closure of the vending channel, CBD shops, institutions and the informal general trade sector.

“To mitigate the impact, the business has opened new distribution channels such as dial a delivery service, high density van sales and online selling,” the Company said.

Likewise, Dairibord anticipates costs to be higher in Q2 than Q1 due to the continued depreciation of the local currency as well as the expenditure incurred as part of the company’s response to the COVID-19 pandemic.

The Company however remains buoyant of its future operations, with assets exceeding liabilities as at 31 March 2020.

In its forward-looking statement, Dairibord said it has adequate strategies in place to sustain business continuity in the foreseeable future and protect value despite operating in an environment that is challenging and volatile.

Equity Axis News

LEAVE A REPLY

Please enter your comment!
Please enter your name here