ZIMBABWE – Diversified industrial conglomerate Innscor Africa Limited’s revenue for the first quarter of financial year 2018 was marginally lower compared to same period in the prior year on the back of a mixed performance across subsidiaries.
Group chief officer Julian Schonken told shareholders at the annual general meeting yesterday that the group’s cost control measures were good and helped achieve savings.
Resultantly headline earnings showed a positive growth against prior year comparable period.
“Overall revenue growth for the group in quarter one was marginally lower than the comparative quarter, but a slight increase in the gross margin percentage ensured that margin dollars showed positive growth,” he said.
Volumes at National Foods were lower by 14,000 tonnes on declines in stock feeds due to the outbreak of avian influenza, which reduced day old chicks’ availability.
Maize and third party products were down by 7,000 tonnes and 6,900 tonnes respectively.
Excluding third party products, whole volume production was 5.4 percent lower but flour unit performed well with an 18 percent volume increase compared to same period last year.
Schonken, however, said profitability for the period largely met expectations and the business has continued to invest in extending its pipeline of key raw materials and has increased working capital by $9 million for essential inputs.
Revenue for the bakeries unit maintained a growth momentum on a 13 percent increase in average loaves per day compared to same period last year.
The recently introduced “family” loaf accounted for 47 percent of total loaves sold in the quarter. However, the increase in raw materials costs compressed the gross margins as selling price to consumers remained flat.
“During the quarter, the transfer and re-commissioning of an 80,000 loaf per day line from Harare to Bulawayo was completed, a month ahead of schedule, and has allowed for increased capacity for the Southern region of the country.
We will look to start an upgrade of our lines in early 2018, resulting in better conversion efficiencies and increased capacities,” said Schonken.
At Colcom, volumes were 7 percent lower than prior year comparable period and the decline emanated from fresh pork line, but positive volumes growth was recorded in the processed lines driven by successful targeted focus on the bacon category.
Schonken said the division maintained margins, with a favourable fair value adjustments, despite operating expenditure being slightly above comparative period.
Demand for product into quarter two has firmed, and will be met through additional pig producing unit, which is scheduled to come on line in the middle of 2018 adding a further 30 percent to current pig production.
Natpak recorded positive results with demand for major products (sacks and flexibles) firmer achieving a 30 percent volumes growth.
Natpak’s second flexible packaging line was commissioned in financial year 2017 and operating at close to full capacity.
“We estimate that the localisation of manufacturing flexible packaging through our plants, critical to many key players in the manufacturing space in Zimbabwe, is now saving the country an estimated $12 million in foreign currency per annum,” said Schonken.
Refrigeration unit, Capri recorded a 12 percent growth in units sold on the back of on the back of increased exports to a number of regional countries.
Volumes at associate company, Profeeds fell 16 percent due to reduction in the supply of day old chicks following the Avian influenza outbreak although profitability continued to improve as a result of well-priced pipeline of raw materials and cost control.
Foreign currency shortages had a knock on effect on Probrands business resulting in depressed results. Schonken, however, said the group will continue on growth strategies banking on the expected economic recovery.
“Notwithstanding the currency challenges being experienced by our business units, we remain extremely positive as regards the country’s economic recovery prospects, and will continue with our strategic agenda which focuses on improved operating efficiencies, growing our existing categories and searching for new, and complimentary growth opportunities,” he said.