Dairibord’s domestic foreign currency sales accelerating, but COVID-19 had its toll on operations

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  • Total foreign currency revenue increased by 123% over 2019
  • Sales volumes were 12.5% below prior year
  • Discussion with Dendairy Pvt Ltd for a merger and acquisition transaction ongoing

HARARE – Dairibord Zimbabwe Limited (DZL) domestic foreign currency sales picked up speed in the year ended 31 December 2020, but the ongoing global coronavirus pandemic (COVID-19) hanger had a significant impact on the business’ operations.

Overall inflation-adjusted revenue for the period grew by 5% to ZW$5.3 billion from ZW$5.0 recorded in the prior year, while export business reeling from the COVID-19 impact which resulted in border lockdown restrictions saw export revenue tumbling 6% compared to the prior year.

“However, a significant growth in domestic foreign currency sales was realised following the introduction of S1 85 of 2020,” the Group’s chairperson Josphat Sachikonye said in a statement accompanying the financials.

“Total foreign currency revenue increased by 123% over 2019 and accounted for 13% of the total inflation adjusted revenue.

“The revenues generated coupled with proceeds from the auction market contributed towards meeting the company’s import bill,” he added.

S1 85 of 2020 which was introduced in April allows citizens to use foreign currencies for buying goods and services in the local market.

It came, according to the government’s indication, as an attempt to cushion businesses and the public from the economic impact of COVID-19 induced lockdowns, but it was also, in reality, an admission that the Zimbabwe dollar which was on a free fall since being made the only legal tender following the introduction of S1 142 of 2019, was prematurely reintroduced.

Dairibord’s sales volumes for the period under review were 12.5% below prior year.

“The performance was particularly affected by a lackluster outturn in the second quarter in which volumes dropped by 46% year-on-year due to COVID-19 restrictions that impacted trading hours and sales channels,” said Mr Sachikonye.

“While there was a recovery in sales in the second half, supply chain constraints limited the business ability to fully capitalise on demand.”

Raw milk intake declined by 6% largely caused by reduced yields at dairy farms due to stock feed price increases. This contributed to the 9% declined in the Liquid Milks category, in sales volume terms.

The Beverages category declined by 18%, while the Foods category which has the highest value and margins increased by 9% over 2019.

Meanwhile, the Group has advised shareholders that it is still in discussion with an unlisted entity, Dendairy Private Limited for a merger and acquisition transaction.

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