ZIMBABWE – National Foods, one of Zimbabwe’s largest food manufacturer has reported a 766% rise in half year revenue to ZWL 12.682 billion (US$35m) in historical terms, for the period ended December 2020.
According to the company, the period saw a significant stabilisation in the economic environment, mainly brought about by reduced inflation following the introduction of the foreign currency auction.
Volumes for the period increased by 25% to 264,000 tons compared to the prior period, reflective of the company’s pricing strategy as well as the improved consumer purchasing ability on the back of reduced inflation as well as its pricing strategy.
The slowing inflation also brought about an increase in operating expenditure amounting to ZWL 1.958 billion (US$5.48m), a 575% increase versus prior period.
There were price increases in many key expenditure lines such as electricity, fuel and staff costs during the period as subsidies were removed and inflationary lag moderated.
Profit before tax for the period increased by 395% to ZWL 2.340 billion (US$6.465m), and was largely impacted by the normalisation in both gross margins and operating costs.
Volumes for the flour unit increased by 56% compared to the prior period, with solid growth in both the baker’s and prepack flour segments.
Leveraging on the bullish performance, the board has approved the purchase of a new state of the art flour mill, which will be installed as a replacement for the existing mill at the Bulawayo Basch Street site, at an estimated cost of US$5 million.
However, its maize meal volumes were disappointing and declined by 23% relative to prior period, in spite of the fact that last season was a drought year which ordinarily results in firm demand.
The decline was due to the market adjustments that took place following the conclusion of the subsidy program, as well as intense competition from imported maize meal, notably from South Africa.
Stockfeed volumes on the other hand improved by 34% when compared to prior period. This encouraging result was driven by the poultry category, where volumes increased by 56% relative to prior period Beef feed volumes were muted, declining by 5% on the back of good early rains and a general reduction in cattle feeding.
Volumes in the grocery division increased significantly by 98% versus the comparative period. The solid growth was achieved across the category portfolio on the back of competitive pricing.
The positive trend was also reflected in its snacks and treats segment registering a 57% rise in volume and Pure Oil increasing by 64%.
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