ZIMBABWE – Dairibord Holdings (Dairibord)’s says its milk intake and sales slumped in the half year to June 2014.
During the period, raw milk intake went down four percent to 12,7 million litres from 13,3 million litres in the half year to June 2013 while sales volumes decreased by six percent to 29,9 million litres from 32 million litres
The group’s chairman Leonard Tsumba said a weak performance at the group’s Malawi unit negatively affected overall growth of the milk portfolio.
“In Malawi raw intake declined by 35 percent mainly due to quality challenges, strategies have been deployed to restore milk intake volumes,” Tsumba said, adding that “product mix and price adjustments to retain market competitiveness culminated in more decline in revenue.”
Liquid milks volumes recorded a two percent growth while foods and beverages declined by 14 percent and 11 percent respectively. The group narrowed its losses to $480 546 in the half year to June 2014 from $3,3 million incurred in prior comparable period.
During the period under review, revenue stood at $43,7 million, down 11 percent from $49,1 million.
“…focus was directed at consolidating the gains from the plant rationalisation process embarked on in 2013,” he said.
Capital expenditure in the half year stood at $4,8 million, spent on a purchasing Maheu processing and filling equipment, a mineral water plant, bulk yoghurt filling equipment and an ice cream plant.
Borrowings increased by 37 percent to $9,7 million, and no dividend was declared for the period under review.
Total assets stood at $68,8 million against total liabilities of $23,6 million.
The milk processor also embarked on an investment programme to support product lines with growth potential.
“As such, capital investments for the half year were at $4,8 million, spent on the Maheu processing and filling equipment, Aqualite plant, bulk yoghurt filling equipment and ice cream plant,” Tsumba said.
The group expects its traditional beverage unit to bolster the beverages category for the second half.
“Dairiboard Pfuko Udiwo Maheu impact on the first half sales volumes was minimal however, as the product was introduced late in May, but will bolster volumes in the second half,” the group said.
The group has invested a total $21,6 million on equipment between 2009 and 2013. This comes as the Zimbabwe Stock Exchange-listed company — formerly enjoying monopolistic advantages — is facing stiff competition from other players such as Delta Corporation, Dendairy and Gushungo Holdings, among others.
Tsumba said costs, which were eight percent below 2013’s, could have been higher if the group had not undertaken a rationalisation exercise. In March, Dairibord announced plans to shut down its Bulawayo and Mutplants as part of strategies to contain costs.
The listed group said it would also cut its staff compliment by 12 percent to 1 505.
Its chief executive, Anthony Mandiwanza, said the streamlining exercise was prudent considering the current depressed business.