ZIMBABWE – Dairibord Holdings Limited Zimbabwe (DHL), a leading food and dairy processor, said that it is in talks with potential investors for the sale of its equity in Dairibord Malawi (Private) Limited (DML).
Dairibord, which controls a 60% majority stake at the formerly state owned dairy processor, expects to exit Malawi by June this year, reports NewsDay.
DHL purchased 60% equity at the former State-owned Malawi Dairy Industries during a privatisation deal in 1998 while the government of Malawi retained 40% shareholding in the new company (DML).
The decision follows the continued losses reported in the unit which widened further to a loss after tax of US$700 000 in 2018, an increase of 17% against the prior year loss on the account of continued working capital constraints.
DHL has been considering the move for a long time now which the chief executive, Anthony Mandiwanza, however, said that the company failed to
“We reported last year at the annual general meeting that the board was considering exiting Malawi mainly because the parent company Dairibord could not capitalise the Malawi unit due to foreign currency shortages in Zimbabwe.
That decision was approved by shareholders of Dairibord. We hope to conclude the divestiture by June this year,” he said.
Mr Mandiwanza said that DHL was in discussion with a potential investor to buy equity to ensure that the company exits with value.
“As recently reported at the analyst briefing, we are in an exclusive discussion with a potential investor.
To that extent, we are limited as to what we can discuss about our strategic decision to exit, suffice to say we have found a promising prospect which if the deal succeeds, Dairibord will exit with value.
There are no other reasons other than that Dairibord are pursuing a value-preserving exit option,” Mandiwanza said.
Dairibord Malawi is the market leader in the dairy, foods and beverages industry in the country as a result of a joint venture between Dairibord Holdings and the Malawi government, but has however experienced viability challenges of late.
On the other hand, its parent company, DHL recorded a 28% growth in revenue to US$126.4 million with profit after tax increasing by more than double to US$6.48 million during its 2018 financial year which was driven by volume growth and selling price adjustments.