ZIMBABWE Stock Exchange-listed manufacturing concern Dairibord Zimbabwe Private Limited (DZL) announced profits for the half year to June would be much lower compared to the same period last year owing to rationalisation and plant upgrades.
BERNARD MPOFU
A cautionary statement published by the group yesterday says a retrenchment exercise carried out by the group is expected to weigh down the company’s performance during the period under review. The company is expected to publish the June results by end of September in line with ZSE listing requirements.
“The group results for the year ending June 30 will reflect operational challenges encountered due to the plant and staff rationalisation projects, escalating costs and liquidity challenges on the market. The plant rationalisation project negatively affected product supply in the first quarter for Dairibord Zimbabwe (Private) Limited,” reads the cautionary statement in part.
“The board of Dairibord Holdings made a decision to realise both the staff and plant rationalization expenses in the first half of the year. As a result, profitability for the first half is expected to be lower than for the same period last year.”
Dairibord Holdings has already stopped production at its Bulawayo and Mutare plants as the group rationalises operations to increase profit margins.
The trimming down of operations, according to the company, will reduce the number of processing plants to eight from 10, while staff levels will also be down 12% to 1 505 resulting in net savings of $1 million.
In March, DZL announced that limited supplies and a relatively high cost of raw milk had forced the company into toll manufacturing as problems confronting the economy continue to make local companies uncompetitive.
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Group chief executive officer Anthony Mandiwanza then told an analyst briefing that the decision to produce cartonised Chimombe milk (through toll arrangements), was part of the group’s plans to contain overhead costs.
Currently a litre of milk costs 62 cents locally compared to an average 40 cents in South Africa. This has resulted in local companies struggling to compete with imported milk products.
Mandiwanza said high utilities, labour costs and a smaller herd of dairy cows had resulted in the limited supply of milk as well as the high cost of production.
