ZIMBABWE – National Foods Ltd, a leading agri-industrial company in Zimbabwe has witnessed a 3.4% increase in volumes for the interim period ending December 31, 2023, reaching 285,000 tonnes, largely driven by growth in Stock feeds.
Consequently, revenue for the half-year period rose by 3.3 percent to US$172 million, primarily attributed to volume-related factors.
The flour division also contributed to this growth, albeit to a lesser extent. However, the gains were countered by losses in rice volume due to India’s export ban, resulting in a substantial rise in global prices.
Despite the revenue increase, gross profit dollars declined by 2.1 percent, or US$784,000, as pricing adjustments were made to sustain volume momentum.
“Operating costs rose by 7.9 percent to US$25.7 million, primarily due to increased expenses in power, repairs, maintenance, and factory wages,” said Mr Edwin Manikai, the group’s chairman
he added that this led to a 21 percent decrease in operating profit before various expenses and taxes, totalling US$11 million compared to the comparative period.
However, there was a significant reduction in interest costs, dropping from US$3.3 million to US$0.9 million, contributing to a 56 percent increase in profit before tax to US$9.6 million.
During the period, working capital investment notably decreased, reaching US$22.9 million, largely due to increased creditor funding.
In terms of operations, the flour milling division increased by 5 percent over the comparative period, largely driven by lower wheat pricing, which in turn lowered flour pricing.
Mr Manikai said National Foods continues to be a key taker of the 2023 local wheat harvest, having purchased more than 60,000 tonnes to date, with most of this volume having been procured from the A Growth contract farming scheme.
On the other hand, stockfeed volumes demonstrated strong growth, closing 14 percent higher than the comparative period, particularly in the poultry and beef categories.
“Additional investment to improve the efficiency of the manufacturing platform will be undertaken in the period ahead,” he said.
During the interim period under review, maize volumes declined by 9,5 percent over the comparative period, although there was some recovery towards the end of the current period under review.
Mr Manikai said National Foods had a substantial import programme in place for raw maize, and it is expected that supplies to the market will be consistent for the foreseeable future.
Volumes in the down-packed unit, which primarily packs rice and salt, declined by 17 percent over the comparative period.
According to Mr Manikai, India, which is the group’s main source of value rice, banned rice exports to protect domestic supplies, and this led to minor supply disruptions and also caused global rice prices to increase significantly, impacting offtake.
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