- Monetary loss widened to ZW$23 billion from ZW$98 million
- Tax expenses for the period more than doubled to ZW$16.5 billion from ZW$8 billion
- However, revenue grew to ZW$290bn while PAT soared to ZW$53.7 billion from ZW$11.9 billion
Harare- Diversified food processor, listed on the Zimbabwe Stock Exchange (ZSE), Innscor Africa Limited has recorded a robust performance during the full year ended 30 June 2022 despite incurring a massive monetary loss.
The group recorded growth across all key categories while revenue, operating profit and profit after tax soared to record highs. This was despite suffering a 23426% monetary loss to ZW$23 billion from ZW$98 million recorded in full year 2021.
During the group’s operating period, the Zimbabwe dollar succumbed by 77% against the United States Dollar while deficits doubled on the parallel market. The Zimbabwe dollar also experienced its record weekly fall in 2022 when it plunged by 33% against the greenback on the RBZ-governed Auction Market.
Apart from that, the fiscal year experienced double-edged monetary policies including partial banning of lending by banks, hiking of interest rates by 120 basis points to a global record high of 200% and tightening of quarterly reserve money by 5%. Despite stabilising the Zimbabwe dollar, the policies were a double edged sword as they made productive borrowing expensive while narrowing the consumer spending behaving as ZW$ liquidity became scarce while hawkish tax policies continued biting companies’ performance.
“In response to the unfolding inflationary pressures, several monetary policy interventions, particularly in respect of local currency interest rates and money-supply management, were introduced at the end of the financial year under review, and despite the resultant short-term softening of consumer demand, these interventions have, for now, achieved the desired result of stabilising the local trading environment,” the Group’s independent non-3xecutive chairman Addington Chinake said in a statement accompanying the full year financials.
“The Board encourages the Authorities to “stay the course” and remove the remaining legal and practical distortions in the area of corporate taxation; - including addressing the confusing and unnecessarily punitive Tax regime which has the undesired impact of unfairly punishing formal businesses both in terms of transaction costs and effective taxation levels.”
Tax expenses for the period more than doubled to ZW$16.5 billion from ZW$8 billion recorded in 2021, translating to a 04% increase.
It is from these headwinds that the Group emerged to post a record revenue of ZW$290.8 billion from ZW$190 billion recorded last year, translating to a 49% increase. Revenue growth was on the back of strong sales volumes across all core categories as the Group’s business units achieved improved capacity utilisation, introduced new products, and expanded product offerings across existing categories. This combined with optimal pricing strategies and growing demand from the informal market drove the Group to achieve a pleasing result.
Because of improved sales volumes and product mix, coupled with a well-priced strategic raw material investment and enhanced production and overhead efficiencies, operating profit soared to ZW$87.8 billion from ZW$24.9 billion, registering a 251% increase over the comparative year.
“Net gains from the continued disposal of the Group’s noncore businesses were recognised under financial income, whilst fair value adjustments on biological assets were also reflective of the inflationary distortions prevalent in the market during the year under review, with fair value adjustments on listed equities following a similar trend.”
Net interest charge for the year of ZW$7.6 billion was 75% above prior year, and representative of elevated interest rates and higher ZW$-denominated loan values.
“The Group’s equity accounted earnings of ZW$8.2 billion continued to contribute positively to the overall Group results and showed growth of 43% against the comparative year,” Chinake said.
After accounting for a monetary loss of ZW$23.2 billion, the group recorded a profit before tax of ZW$70.3 billion representing a growth of 250% against the comparative year’s PBT of ZW$20 billion.
Resultantly, profit after tax more than quadrupled to ZW$53.7 billion from ZW$11.9 billion, which was a 350% jump.
OPERATIONS REVIEW
MILL-BAKE
This reporting segment which contains the Group’s Bakery Division, National Foods, and the Group’s non-controlling interest in Profeeds recorded a pleasing performance. Annual loaf volumes in the Bakery Division accelerated by 19% ahead of prior year on the back of improved loaf quality, and a renewed focus on the sales and distribution functions. the Group restructured the operation in the final quarter of the financial year into its core components of manufacturing, sales, and distribution, and is confident that this will further improve loaf quality, enhance production efficiencies, and allow for significantly improved market-reach.
“Investment is well underway at a US$25mn, new world-class, fully automated manufacturing facility in Bulawayo, and this site is expected to be operational before the end of the 2022 calendar year, whilst further plant automation enhancements will follow in the Harare plant; additionally, a distribution vehicle re-fleeting programme is now also in progress.”
At National Foods, volumes grew by 13% on an overall basis over the comparative year, driven by solid performances in the Stockfeeds (12% up), Down-Packed (31% up), Traded Goods (34% up), and Snacks and Biscuit divisions which advanced by 24%.
Volumes in the Cereals division grew by 35% against the comparative year driven by the ever-popular “Pearlenta Nutri-Active” range of instant maize porridge; other exciting product additions introduced during the period included “Better Buy Soya Delights” as well as the “Smart Carbs” range of instant breakfast cereals, developed with the health- conscious consumer in mind while Profeeds, stock feed volumes increased 15% ahead of the comparative year with sales of day-old chicks surging by 39% over the same period, driven by sustained demand, particularly across the poultry sector.
Fertiliser category, operating under the “Nutrimaster” brand, recorded excellent volume growth of 152% over the comparative year as the business executed on a firm order book ahead of the 2021 summer cropping season, and further supported via the recent 2022 winter wheat plantings.
PROTEIN
This reporting segment comprises the results of Colcom, Irvine’s and Associated Meat Packers (“AMP”), which includes the “Texas Meats”, “Texas Chicken” and “Texas Dairy” branded store networks. Colcom Division, comprising Triple C and Colcom Foods, recorded an 11% growth in volumes over the comparative year, driven by strong performances in all core fresh and processed product categories while Irvine’s recorded volume growth across all three core categories. In the table egg category, a 6% growth over the comparative year represented record production within this category. Frozen poultry demand remained firm, and volumes increased 17% versus the comparative year. Demand across the day-old chick market also improved, and volumes closed 25% ahead of the comparative year.
At AMP, sustained protein demand combined with further expansion of the product portfolio and improved market-reach, drove overall volume growth of 16% over the comparative year.
“Notwithstanding constrained raw material supplies at times, the beef category experienced a pleasing recovery with volumes closing 21% ahead of the comparative year while the chicken category achieved volume growth of 10% against the comparative year which was another solid result.”
OTHER LIGHT MANUFACTURING AND SERVICES
This reporting segment comprises Natpak, Prodairy, Probottlers and the Group’s non- controlling interests in Probrands. Natpak recorded pleasing aggregate volume growth of 19% over the comparative financial year while Prodairy continued its positive growth trajectory, as volumes closed 31% ahead of the comparative year, with strong performances across all of the major product categories.
Probottlers recorded overall volume growth of 23% ahead of 2021 buoyed by the carbonated soft drink category operating under the “Fizzi” brand, following investment into a new dedicated 500ml bottling line. While the established cordial category, operating under the “Bally House” brand continued to experience favourable volume growth during the period.
At Probrands, overall volumes closed marginally behind the comparative year, although this was largely a result of the operation placing more focus on lower volume, higher-margin specialised categories.
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