ZIMBABWE – National Foods Holdings Limited, Zimbabwe’s listed agri-industrial concern is seeking to split its groceries unit into down-packed and traded goods units.
The giant milling company is involved in flour and maize milling, stock feed, and cereal production as well as projects in groceries, snacks and treats and cooking oil manufacturing.
The company has taken steps in a bid to sharpen accountability at a business unit level in order to become more agile and responsive to the environment.
“As part of this work the company has created additional business units to provide greater focus on several of the growing categories.
“To this end, the groceries unit will be split into the Down-Packed unit (rice, salt, sugar beans and popcorn) and the Traded Goods unit (pasta, canned products, jam and peanut butter),” it said.
This was revealed at its recently released trading update for the full year ended June 2021, with National Foods highlighting it has planned to invest US$4m into additional cereal manufacturing plant.
The investment will allow the group to expand its repertoire of breakfast cereals and extruded products by availing an exciting range of affordable and nutritious cereals to the market.
It is anticipated that the launch of these products will occur progressively from mid-2022.
The group’s overall volumes during the period under review increased by 15% to 525,000 tons compared to the prior period.
This was achieved in spite of the disappointing result from the Maize unit, where volumes declined by 32% largely on the back of intense competition from imported maize meal and the discontinuation of the subsidy program.
Excluding Maize, the year-on-year volume growth across all categories was 48%. This positive outcome was driven by improved consumer demand and a steadily improving market presence across the portfolio.
Revenue for the period increased to ZW$ 28.07 billion (US$775m), a 343% increase on the prior period on the back of the volume growth as well as the impact of inflation.
Profit before tax increased by only 82% to ZW$ 3.42 billion (US$9.45m). This was a muted performance relative to the rate of inflation and was largely caused by lower gross margins across the portfolio, the performance of the Maize unit, as well as significant increases in operating expenditure and interest costs.
Volumes for the Flour unit increased by 43% compared to the prior year. This growth was achieved on the back of strengthening consumer demand.
Whilst growth occurred in both the baker’s and prepack flour segments it was especially strong in prepacks as consumers resorted to home baking with the COVID-19 induced lockdowns and movement restrictions in place.
The company is continuing with the establishment of a new state of the art Flour mill, which will be installed as a replacement for the existing mill at the Bulawayo Basch Street site, at an estimated cost of US$ 5 million.
Meanwhile volumes at its stockfeed unit, grocery division, snacks and treats and pure oil segment increased by 33%, 74%, 57% and 75% respectively.
National Foods has vowed to continue to keenly support contract farming of maize, soya beans, wheat, sugar beans and popcorn.
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