National Foods’ Q1 2021 volumes up 15%, but maize division lags behind

  • All divisions except the maize division performed well
  • Maize division volumes declined by 35%
  • Parent company, Innscor Ltd welcomes introduction of the forex market

Harare – National Foods Limited, one of the largest manufacturers and marketers of food products in Zimbabwe and the SADC region closed the first quarter ended 30 September 2020 (Q1 2021) with an overall 15% increase in volumes than the same period last year and also showed continued growth against last quarter of FY20.

All divisions under the National Foods portfolio performed well in volume terms during the period under review, with the exception of the maize division.

In a trading update for the period under review, Innscor Africa Limited, parent company to National Foods revealed that the Flour division recorded a 43% growth in volumes against the comparative quarter, driven by an improved wheat supply, firmer demand from the pre-pack category and the general adoption of open-market policies.

“The Maize division recorded a volume decline of 35% against the comparative quarter. The gradual removal of subsidies was a key volume determinant, coupled with a larger than expected regional maize crop and competitively priced imported maize meal affecting the local informal market dynamics,” the Group said.

The Stock feeds division achieved a 26% growth in volume versus the comparative quarter showing a favourable growth as market demand recovered, allowing for enhanced pricing strategies and a focus on product quality.

The Grocery and Snacks divisions both produced strong volume growth, a function of market and pricing stability, capacity enhancements, and a continuation of new products being introduced to the portfolio.

In the Grocery division, volumes grew by 76% over the comparative quarter, whilst in the Snacks division volume growth of 21% was recorded.

Commenting on overall Group operations, Innscor said, “Despite the relative improvement in trading conditions, the local effects of 2019/20 drought season and COVID-19 pandemic are yet to entirely dissipate. Considerable focus therefore continues to be applied to ensuring appropriate levels of paid-up inventory are on hand, while ensuring adequate levels of local liquidity are procured and deployed to finance the Group’s working capital requirements. The relatively stable trading environment has also given rise to the anticipated correction in gross trading margins across many Group businesses; this coupled with a fully-indexed cost base and high local interest rates means that business model optimisation and financing decisions remain critical focus areas for our management teams going forward.”

The Group added that the introduction of the foreign currency auction system and Statutory Instrument 185 of 2020 allowed for the implementation of precise pricing strategies, enhanced planning capability, improved capital allocation and value preservation for the Group’s business units.

“…these measures are extremely encouraging”.

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