HARARE – Zimbabwe Stock Exchange listed entity, Dairibord Holdings Limited (DZL.zw) recorded an improved 2018 half year financial performance on the back of strengthened demand across all segments. This in turn was driven by improved performance in the agriculture and mining sectors of the economy.
In a statement accompanying the H1 financial report, the group said that the raw material intake was up 12 percent comparative to the same period last year.
“The improved intake benefitted from the enhanced milk supply strategy which is anchored on recruitment of more farmers, herd growth and productivity improvement at farm level,” the Group said.
“The growth in milk intake will benefit market share for the liquid milks category and reduce dependence on imported milk powders, which are expensive and difficult to secure given the prevailing foreign currency constraints.”
Revenue increased by 15 percent to $50.872 million from $44.354 achieved during the H1 2017, while volumes grew by 6 percent to 41.002 million litres.
Condiments, ice creams and cartonised Fun and Fresh volumes grew significantly over the prior period, benefiting from increased capacity invested in 2016.
“Demand was firm across all categories, however, growth in volumes sold was constrained by supply challenges for both packaging and raw materials for the majority of the Group’s product lines,” reads the Group’s statement.
The Group achieved an operating profit of $0.720 million, which is a 239 percent improvement over $0.212 million recorded in the prior year.
The restructuring undertaken in 2017 enabled the Group to ‘effectively deal with overhead costs (contained at 3 percent) despite increasing cost push pressures.’
Net cash outflow from operations improved to $0.765 million from prior period outflow of $1.253 million, on account of improved operating performance and collections.
“However, tightening of trade terms by suppliers and investment in inventories negated the overall cash flow performance,” said the Group.
The group also lamented constraints brought about by the prevailing foreign currency and cash shortages which has a direct and indirect impact on the supply of raw materials and input prices.
This resulted in the 13 percent increase in total costs against a volumes increase of 6 percent.
“The increase in costs against constrained capacity to adjust selling prices, affected profitability,” the Group said.
Dairibord Holdings expects a better second half performance supported by increased raw milk intake and import substitution initiatives to reduce the forex bill.
“Improved efficiencies across the value chain will optimise savings from the new business model implemented in 2017,” reads a statement from DZL.
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