Dairibord Zimbabwe Holdings has recorded revenue growth of 6% for the four months ending April 30 2015 due to changes in product mix, reduced steri production cost, increased contribution from the heifer scheme, cost containment measures and the performance of a Malawi venture.
BY TARISAI MANDIZHA
Speaking at the company’s annual general meeting in Harare yesterday, Dairibord Zimbabwe Holdings group chief executive officer Antony Mandiwanza said the overall business environment in Zimbabwe was tough. He said business was low due to a decline in disposable income, negative inflation and the growth of the informal sector.
“The key driver of the business for the first four months was growth in beverages and of course the changes in product mix, we are seeing more and more trends towards the low value products and of course the high product mix,” Mandiwanza said.
He said key drivers for the company from January to April included reduced steri production cost due to the commissioning of a new plant in Chipinge, increased contribution from the heifer scheme and the impact of cost containment measures.
In the period under review, raw milk intake was 3% down from last year, volume 22% above the same period last year, revenue 6% above last year, operating profit better than last year at 1% from -2% in 2014.
“The key issue on the milk intake is because in Malawi in January and February we were not able to collect the milk from the suppliers and this had an impact on the overall milk supply of the company,” Mandiwanza said.
He said looking at the portfolio, liquid milk was trending at 7% below the same period last year, foods 1% below the same period last and beverages 54% above the same period last year.
“Decline in disposable income, negative inflation, the growth of the informal sector as you know, as you walk around the city of Harare you can see exactly what the informal sector is doing, and obviously this has affected our major channel for distribution especially for the retail sector,” Mandiwana said. He said the weak commodity prices, poor agriculture season and also that the IMF had revised down economic growth to 2,8% or 3,2% and also the tax collector, revenue was 6% below target in the first quarter which would weaken government spending and dampen consumption had impacted negatively on the business performance
In Malawi, he said there was political stability but depressed macro-economic performance.
“Agriculture at the moment is very poor due to the heavy flooding in January and February, donor support will continue to be an issue but thank God there is an appetite and interest to fund directly donor-funded projects, the lending rate remains high despite the declining inflation, but overall the environment is slightly better as it was last year,’ Mandiwanza said.
He, however, said the current economic situation will remain depressed and that the country will witness growth of informal sector and that there will be food shortages.