Innscor’s first quarter revenue plunges amid tough economic conditions

ZIMBABWE – Innscor, manufacturer of consumer goods products in Zimbabwe has reported a decline in volumes in the first quarter ended September 30th owed to reduced consumer spending power and continual deterioration of macro-economic fundamentals.

The diversified food processor’s subsidiaries that recorded a slump in volumes include Profeeds, Colcom, National Foods, Probottlers, Bakery operations and Probrands.

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In a trading update, the firm said production levels in the bakery operations were constrained by reduced availability of wheat supplies into the country, and this affected the ability of the business to adequately service the market demand.

Consequently, total loaf volumes were 38% behind those recorded in the comparative period.

Going forward, the availability and pricing of this stock, will largely determine supply and pricing levels of bread on the market as the Industry is currently utilising government subsidised flour.

This comes as Treasury is set to remove subsidies for maize and wheat, which were being provided to grain millers through the Grain Marketing Board.

“We remain extremely focused on working with the authorities in determining a long-term solution that will allow for more consistent bread supplies to consumers as well as a more sustainable business model for bakers,” Innscor said

Quarter one volumes at National Foods were also subdued, closing the period at 36% below the same period last year.

Although volumes were affected across all categories, flour was heavily impacted, closing 50% below last year, on the back of intermittent supply and increased cost of wheat.

The maize category was the least impacted, with volumes for the quarter closing 5% below the prior period, as subsidies on raw maize assisted with maize meal affordability, driving consumption.

Total volumes at Colcom were 17% below those recorded in the comparative period.

Innscor said volumes across the operation’s processed lines were generally subdued, but were partially off-set by continued growth in the fresh lines which grew by 43% over the comparative period.

“Pig supply improved by 26% over the comparative period, as a result of the additional pig unit now supplying at full capacity. In addition to the volume growth levels, this part of the operation continued to see outstanding production metrics being achieved,” Innscor said.

At Probottlers, production was affected by extremely poor power supply and this negatively affected volumes in quarter one, which were 44% down on the comparative period.

In addition, volumes at Profeeds were 11% below those recorded in the comparative period, with increased raw material replacement costs impacting on selling prices.

Both frozen poultry and day old chick volumes saw volume declines against the comparative period, with frozen poultry numbers being 18% lower, and day old chick sales reducing by 44%.

Both lines were affected by the steep increases in key raw material costs which subsequently affected overall demand.

More so, volumes at Probrands were 40% below those recorded in the comparative period, with much of this decline occurring in the rice category as consumers switched to cheaper local alternatives.

However, there was a silver lining as volumes at Associated Meat Packers (AMP) , Natpak, eggs and raw milk were positive.

AMP, which was previously reported under Colcom, has now been unbundled into a stand-alone operation and has had its overall volumes for the business 18% above the comparative period.

The business consists of a cattle-buying and slaughter operation, a down packing and processing facility and the wholesale network, which operates under the AMP and Texas brands.

Natpak delivered solid financial performance with an overall volume increase of 26% over the comparative period.

Table egg volumes were 39% above the comparative quarter, arising from the operation returning to full production capacity, following the re-building of the layer production base.

Overall raw milk intake volumes achieved in the quarter were 30% above those recorded in the comparative period, with good performances in the Cultured Milk, UHT Milk and Dairy Blend categories, following the completion of capacity enhancement investments, reports NewsDay.

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