DAIRIBORD Holdings Limited sales volumes for the first half of the year were static due to the weak demand of products on the market, a company official has said.
Business Reporter
Speaking at the company annual general meeting in Harare on Friday, Dairibord chief executive officer Anthony Mandiwanza said the current operating environment has a negative impact on the performance of the group in the first half of the year.
“Sales volumes were static on account of weak demand. The operating environment will remain challenging characterised by low disposable incomes, deflation and low investment,” Mandiwanza said.
In the period under review, raw materials and packaging costs declined by 13% as compared to the same period last year. Labour costs declined by 8%, repairs and maintenances were down 19%. Utilities expenses increased by 20%, while other expenses declined by 22%. This resulted in a 10% reduction in the group’s total expenses.
“The reduction in operating costs is a result of the cost-reduction initiatives deployed by the group. Management will continue to streamline the business to improve efficiencies through research and development, new investments and consolidation of operations,” Mandiwanza said.
He said the performance of the business will improve, driven by new products and line extensions, new plants and equipment to increase capacity and improve efficiencies.
He, however, said the group was currently implementing a number of projects to meet the growing demand.
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Mandiwanza said the group would commission a plant in Chitungwiza on Wednesday.
An aqualite water plant would be complete by June 1 and a yoghurt plant would be commissioned in July.
The ice-cream cones and sticks plant will be commissioned in August and a sterilised milk plant will be commissioned in November, Mandiwanza said.
The new projects have a $10 million budget. Mandiwanza said part of the funding was coming from the $6 million line of credit which was secured last year from the PTA Bank. The money attracts an interest of 10,3% per annum.
Mandiwanza said the completion of these projects would increase capacity to satisfy existing demand, expand the group’s revenue streams, improve production and enable the business to compete in all segments.
