Harare – National Foods Limited, one of the largest manufacturers and marketers of food products in Zimbabwe and SADC region registered a robust performance in the half year period to 31 December, 2018 highlighted by a 79 percent increase in net profit mainly driven by significant volumes growth across its units.
The Group which is listed on the Zimbabwe Stock Exchange, is a diversified conglomerate with activities consisting of the milling of flour and maize, the manufacture of stockfeeds and the packaging and sale of other general household goods. The Group also owns a portfolio of properties that are leased out to the main business units and to third parties.
Despite facing a difficulty period headlined by closure of its milling operations in early December last year due to persisting foreign currency shortages, the Company registered growth in profit to $16.8 million from $9.4 million recorded in the same period prior year.
Revenue increased from $147.2 million to $207.7 million while EBITDA for the period increased by 77 percent compared to last year.
The company said volumes grew by 18.4 percent over the prior period largely driven by Stockfeeds as the poultry sector recovered from the Avian Influenza outbreak and Maize on the back of a poorer local maize harvest.
During the reporting period, the company said it was significantly affected by inflationary pressures which compelled the company to price adjustments so as to maintain viability of its operations.
“The second half of the period was characterised by a significant increase in inflation. In response pricing regrettably had to be adjusted substantially in most categories in order to maintain viability,” said the Group’s Chairman, Todd Moyo.
“These price changes led to reduced volume momentum over the October to December quarter where volumes grew by only 11.7% compared to 18.4% for the half year.”
Flour milling division volumes for the period grew by 3.4 percent compared to last year.
“Demand for bread flour was unprecedented due to the relative affordability of bread and the business decided to prioritise supplies to bakers at the expense of pre-packed flour, where volumes declined by 40.8%. In spite of this and the fact that our mills were operating at maximum capacity, we were unable to satisfy the demand for Bakers flour.
“The on-going sustainability of this unit will largely be driven by the availability of imported wheat and market related pricing across the flour to bread value chain.”
The maize milling division delivered a “much-improved” result driven by volume growth of 60 percent over last year due to the affordability of maize compared to other starches as well as the poorer local maize harvest and reduced household maize retentions.
Moyo also highlighted that stockfeeds volumes recovered from the prior year Avian Influenza impact to register a 39 percent growth. During the period, the Group increased stockfeed prices mainly due to the higher prices of imported soya and minerals and vitamins.
Snacks and Treats unit also recorded growth in volumes, while MCG and Pure Oil volumes slumped due to disruptions in imported raw material supply and lack of adequate access to foreign currency.
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