National Foods’ volume growth slows down in third quarter impacted by decline in maize output

ZIMBABWE – National Foods Holdings Limited, Zimbabwe’s listed agri-industrial concern, has reported 3% volume growth in its third quarter ended March 31.

This is a slow volume growth rate compared to the year-on-year volume rise of 24% achieved in quarter 1 and 8% achieved in quarter 2.

The company has attributed the slow growth to unexpected decline in maize offtake following the excellent 2021-2022 harvest. Excluding Maize, volumes increased by 9% compared to last year.

On a cumulative year to date basis, volumes are 11% ahead of prior year, driven by stockfeeds, rice, salt and snacks.

During the period under review, flour volumes have shown moderate growth, with a solid performance in the baker’s flour segment and a more subdued outcome in the pre-pack segment. Meanwhile, stockfeed volume growth remains solid, driven by the key poultry segment.

The Snacks unit continues on its growth path, albeit with reduced momentum in Q3 caused by the delayed return of schools and increasing raw material prices.

Performance in the Cereals unit which includes extruded products was strong, as a result of broadening of the product portfolio to support the Pearlenta Nutri-Active maize porridge.

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“Whilst consumer demand remains solid, it has clearly been impacted by the recent resurgence in inflation.

“To this end, we welcome and support the measures taken by the authorities to control inflation,” highlighted the company.

The current agricultural season has been impacted by erratic rainfall patterns, and it is likely that imports of maize and soya will be needed before the 2022-2023 harvest.

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Significant efforts are being made by Government and the private sector to promote the forthcoming local winter wheat crop, a critical initiative in view of the substantial increases in international wheat prices.

Meanwhile, the war in Ukraine has caused a surge in global commodity prices, with the jump in wheat and fertilizer prices being of particular relevance to National Foods.

These increases will see inflationary pressure in US$ terms in many of the categories the company participate in during the coming periods, and especially the flour to bread value chain.

As part of its recovery strategy National Foods highlighted that, “The Group is carefully managing its pricing strategy, doing its utmost to minimise the impact on consumers by moderating prices in order to retain volumes.”

In addition, the Harare Cereal and Bulawayo Flour mill projects continue to make steady progress and are expected to be commissioned mid-2022 and early 2023 respectively.

Notwithstanding the recent headwinds driven by local inflation and the situation in Ukraine, National Foods remains optimistic on the trajectory of the local economy.

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