Harare – Diversified conglomerate, National Foods Limited, recorded a mixed set of results with flour milling and stock divisions delivering disappointing results for the year ended June 30, 2018.

In flour milling division, the Company’s Chairman Todd Moyo said, profitability in the year under review was extremely disappointing, declining by 37.3 percent.

“That this occurred with record volumes is a reflection of the severe margin compression in the category, the reasons for which have been outlined elsewhere in this report.

“Flour is the most significant category in our portfolio, making it imperative that meaningful solutions to both the viability of the mill-bake value chain and the foreign wheat creditor position are found in the near future.”

The report noted that flour selling prices declined by 2.5 percent due to the inability to increase prices against a largely static bread price.

Moyo said the Maize milling division achieved an improved result, registering a small profit having achieved a loss of $0.77m in the same period last year.

“Volumes increased by 10.5 percent, a positive result given the excellent local harvest. Government has agreed that the national food security and commercial activities of the GMB will be separated into autonomous units.

“It is hoped that this will result in a more level competitive environment in the category in future. The company continues to focus intensely on innovation within the maize category portfolio and it was encouraging to note that the new Pearlenta High Fibre products have been well received by health conscious consumers.”

In the period under review, Moyo said volume performance for the Stockfeeds division was disappointing, declining by 13 percent on prior year due to the Avian Influenza outbreak which severely compromised availability of day old chicks in the market and consequently led to reduced feed volumes.

Poultry volumes recovered in the second half of the year as day old chick availability improved whilst beef and dairy feed volumes were also softer following the excellent 2016-17 rains which improved pastures and reduced supplementary feeding requirements over the past year.

During the period under review, the MCG division produced a strong result for the period, driven by rice and to a lesser extent salt which maintained its market leading position.

“Mahatma and Red Seal rice performed strongly in the market as national rice supplies were constrained by foreign currency availability. The fortunes of this unit will continue to be driven by the ability to secure foreign currency to import raw materials,” said Moyo.

In snacks and treats, a division that manufactures extruded corn snacks and loose biscuits under the Zapnax, Kings and Iris brands, Moyo said volumes increased by 31 percent compared to the previous period, with firm growth from Iris loose biscuits.

“Whilst the unit is not yet a significant contributor to the Group we believe that the snacks and biscuit categories have growth potential and to this end have recently made further investment in increasing capacity and capability in this unit.

“The focus is to continue increasing volumes on the back of improved capacity and distribution whilst broadening the portfolio of products. Cream biscuits will be launched under the Iris brand during the first half of next year.”

Additionally, Moyo said the Pure Oil produced an excellent result for the period, delivering attributable earnings of $5.2m which represented a 182 percent increase over the previous financial year.

“In a relatively short period of time Pure Oil has become the market leader in the cooking oil category and has successfully kept the product on shelf in spite of the challenges in securing foreign currency for raw material imports.

“Pure Oil will be entering the bakers’ fats and margarine categories and these products will be introduced in the first half of the next period.”

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