Zimbabwe’s Dairibord doubles profits in 2018 FY as revenues shore up

ZIMBABWE – Dairibord Holdings Limited, a leading dairy company in Zimbabwe, posted profit after tax increase by more than two-fold to US$6.48 million in its 2018 financial year up from US$1.94 million posted in the previous year.

The dairy firm’s revenues in the full year ended December 31, 2018, grew by 28% to US$126.44 million.

This is despite a weak operating environment which according to Josphat Sachikonye, chairperson at Dairibord, had negatively impacted the company’s product supply and the cost of doing business, reports NewsDay.

“The operating environment deteriorated during the period under review, in particular the second half of the year which was characterised by worsening foreign currency shortages and rising inflation.

These developments had a negative impact on product supply and the cost of doing business, leading to consumer price increase.

Year-on-year inflation closed at 42,09%, while the foods and non-alcoholic beverages inflation surged to 53,68%,” he said.

During the period under review, Dairibord’s total borrowings declined to US$3.7 million from US$7.78 million in the previous year, while finance costs reduced to US$570 million from US$718 million.

In addition, net cash generated from operations increased by 48% to US$9.23 million due to improved operating performance.

The group also recorded an increase in raw milk intake improving by 20% compared to the national growth of 14%, which reflects the positive outcome of the firm’s milk supply development strategy.

Early this year, the firm was granted a special dispensation by the government to import raw milk from Mozambique in order to increase production as part of an overall strategy to continue capacitating the dairy industry in the country.

Sachikonye revealed that liquid milk volumes grew by 9% and volumes sold from continuing operations increased by 3%, but growth was constrained, worsening foreign currency availability to buy raw and packaging materials.

However, the company expects the operating environment in 2019 to improve that as it preps for growth in its operations.

“The recent Monetary Policy Statement coupled with commitment by government to implement the Transitional Stabilisation Plan is expected to improve the operating environment in 2019.

Inflation is expected to decline, while aggregated demand is expected to slow down in the medium term,” he said.