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National Foods posts solid results


NATIONAL Foods posted a solid set of results for the year ended 30 June 2014 on the back of an increase in volumes sold during the period under review.


The group which is one of Zimbabwe’s largest manufacturers and marketers of food products, delivered revenue growth of 11% on an increase in volumes sold of 8% compared to the previous financial year.

The group’s margin grew fractionally to 23% despite reviewing pricing in order to remain competitive while it also recorded a non-recurring profit of $1,5 million realised primarily on the disposal of some assets.

“Whilst the deficit in locally grown maize, wheat and soya beans remains we are compelled to maintain long future priced pipelines of imported raw materials which can affect our margins in periods of commodity pricing volatility,” chairman Todd Moyo said.

Although the maize milling division posted good results, with volumes increasing by 19%, the flour milling division experienced subdued trading patterns.

Revenue decreased by 1% due to lower realisation per tonne of wheat sold.

Year on year profitability dropped by 13% as the company continued to sacrifice margin in order to hold volumes against flour imports.

Bakers are still permitted to import duty free flour, as the country‘s wheat cropping is insufficient to cater for demand.

“Spot traders of flour have the ability to import cheap products into Zimbabwe whereas National Foods is committed to a five-month pipeline of pre-priced wheat,” said Moyo.

This scenario leads to the company having to compromise margin in order to hold volumes against flour imports.

Moyo said in this financial year, the company’s maize pipeline was well priced thereby supporting the margin.

The company’s current ratio stood at 2,12 and this liquidity ratio estimates the ability of a company to pay back short-term obligations.

This high ratio indicates the increased capability of the company to pay back its debts.

The debt-to-equity ratio which quantifies the company’s financial leverage stood at 0,63. Lower values of debt-to-equity ratio are favourable indicating less risk.

The company had a high interest coverage ratio (ICR) of 14,4.

This ratio is a measure of a company’s ability to meet its interest payments and determines how easily a company can pay interest expenses on outstanding debt.

An interest coverage greater than 5 is basically desirable.

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