ZIMBABWE – The cash-strapped Cold Storage Company Limited (CSC) has registered a loss of $1,4 million during the quarter to March 2015 against a budgeted loss of $1,7 million.
Ngoni Chinogaramombe, CSC’s chief executive in a trading update presented to the Lands and Agriculture parliamentary portfolio committee on Tuesday said the company currently with a capacity utilisation of less than 10 percent, is in a deep financial crisis and facing major operational challenges.
“Turnover for the quarter was $871 000 compared to a budget $1,58 million. We slaughtered 1 020 head against a budget 1 828 head. The company also slaughtered 2 214 head as service slaughters during the quarter,” Chinogaramombe revealed.
He added that all slaughters were done at their Bulawayo and Chinhoyi abbatoirs while its Masvingo and Marondera abbatoirs remained closed.
In the first five months to May 2015, CSC managed to slaughter 5 667 cattle out of a total of 77 587 cattle countrywide.
Last year, CSC utilising six percent of its installed capacity managed to slaughter 13 735 head, representing five percent of a national total of 256 219 head slaughtered.
Chinogaramombe said as a direct consequence of inadequate capitalisation the capacity utilisation has been averaging below 10 percent over the last six years.
“The huge designs of CSC factories make them uncompetitive against the small private abattoirs due to high overheads. The fixed cost component in the overheads is high and these cannot be fully absorbed as the factories are operating at far less that their optimal levels,” he said.
Over the past 23 years, CSC has lost its 50 percent domestic market share following the liberalisation of the beef industry to private abattoirs.
The CSC chief noted that its market was steadily eroded to 34 percent by 2000.
“There was a sharp decline to six percent in 2002 after the August 2001 foot and mouth disease which saw the suspension of European Union (EU) exports and off-shore funding which went with it,” he said.
Chinogaramombe said following the identification of idle assets for disposal such as land and its transport and logistics division in 2013, CSC will accumulate an enhanced value of $14,5 million if given the green light from government.
“However, the plan has not yet been approved pending the completion of a forensic audit as requested by government,” he said.
CSC is currently being weighed down by outstanding creditors including employees who have accumulated from an amount of $2,6 million in 2009 to the current $29 million.
“The bulk of the creditors are utilities like municipal charges and electricity. Employees are owed $3,5 million and the pension fund $4,5 million. There is a constant threat of creditors attaching company assets. Already employees at Bulawayo branch have attached assets including the cattle at the ranches,” he said.