ZIMBABWE – Dairibord Zimbabwe Ltd (DZL), Zimbabwe’s manufacturer of liquid milk, food and beverage products has recorded a 328% jump in profit for the year ended December 31, 2019 to $142 million compared to $36 million recorded in the same period in 2018.
The group achieved an operating profit of $90 million compared to $55 million achieved the previous year. An operating profit margin of 8.1% was attained up from 7.9% in prior year.
Group chairman, Josphat Sachikonye, attributed the improved performance to reduced fixed overheads, diligent procurement practices, and an intensified drive to improve operational efficiencies.
Foreign liabilities reduced from US$3.9 million in 2018 to US$0.93 million in 2019, a 76% drop as the company focused on managing and reducing foreign denominated debts.
Revenue came in at $1.115 billion, which represented a 60% growth on prior year figures due to growth in exports and necessary product price adjustments.
For the year under review, export revenue doubled to US$3.4 million compared to prior year’s US$1.7 million as the company continued to drive exports in order to increase its regional foot print and to generate foreign currency to cover import requirements.
Raw milk intake grew by 10% compared to national milk growth of 7.2% benefiting from milk supply development initiatives targeted at small, medium and large-scale milk producers.
However, sales volumes went down 17% against an industry average decline of 23% for the manufacturing sector. The market battled drop in disposable incomes due to inflationary pressures.
According to Dairibord, the beverages category fell by 23%, while the food category which accounts for 9% of the sales was also on the downside with a 39% decline.
Meanwhile, the disposal of Dairibord Malawi was finalised in the third quarter of 2019. At the time of the disposal, the liabilities of the subsidiary exceeded assets.
The food and dairy processor resolved to dispose of the regional perennial loss making unit, which had been impacting negatively on overall group’s performance.
Going forward, the company noted that the outbreak of the Covid-19 pandemic will have a knock on effect on the business and the economy as a whole, with its negative effects already being felt across the globe.
Despite the effects posed by the pandemic and the challenges that exist in the economy prior the outbreak, Mr Sachikonye indicated the business will maintain its focus on revenue enhancement initiatives, support raw milk production, cost containment and increased production efficiencies.
Early February, the company entered into a strategic alliance and share subscription agreement with its single largest supplier of raw milk, Tavistock Estate Limited.
This development will see the parties collaborating in the expansion of a sustainable raw milk supply business model set to unlock shareholder value.