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Operating costs chew into Padenga profit

Resultantly, profit after tax fell by nearly 53% to US$5,33 million at the end of June compared to US$11,27 million in the comparative 2022 period.

MINER and crocodile farmer Padenga Holdings Limited (Padenga)'s operating costs rose by nearly 39% to US$63,78 million in the half year ended June 30, 2023, owing to an increase in expenditure.

This led to its overall profit after tax halving.

In the comparative 2022 period, operating costs were about US$46 million.

Resultantly, profit after tax fell by nearly 53% to US$5,33 million at the end of June compared to US$11,27 million in the comparative 2022 period.

The rise in operating expenses was due to Padenga undergoing major capital projects at its mine and crocodile pens.

“The group recorded revenue of US$74 420 384 for the six months under review,” Padenga chairperson Themba Sibanda said in a statement accompanying group results for the half year ended June 30, 2023.

“This was a 31% increase over the US$56 865 837 recorded in the prior period. Dallaglio contributed 84% to the revenue, while Nile crocodiles added 16%.”

“The revenue performance for the group was largely due to the significant contributions from Eureka Gold mine, coupled with the carry forward of skin sales from 2022,” he said.

The group recorded a reduced earnings before interest, taxes, depreciation and amortisation of US$10,99 million for the six months, impacted by an increase in operating costs.

A reduction of 15% was recognised on net interest expense for the group at US$3,67 million, owing to restructuring of borrowings.

The group generated US$12,88 million from operating activities for the year.

“The increase in cash generated was mainly due to improved revenues and efficiencies,” Sibanda said.

Its mining subsidiary, Dallaglio Investment Limited refurbished the underground mine at Pickstone Peerless Mine in Chegutu, phase one of the project having been completed last month.

The mining subsidiary registered gold sales of 1 080 kilogrammes during the period under review from 933kg in the comparative 2022 period.

For its crocodile skins, strategies to improve skin quality and an annual rehabilitation of crocodile pens saw a 90% increase in skin harvest volumes during the first half of 2023.

Total assets were up by 11% to US$200,25 million as at the end of June, compared to US$181,26 million at the end of last year.

Padenga was left in a liquid position having US$1,20 to every dollar of debt at the end of June.

Sibanda indicated that commercial production at the Pickstone Peerless Mine had already begun.

“This is poised to contribute significantly to the group's revenue and profits, going forward. For the second year running, Eureka Mine continues to deliver robust performance, contributing significantly to volume growth and profitability. Various operations and cost optimisation initiatives are in progress to further consolidate this growth.

“The crocodile operation continues with its initiatives to produce high quality skins that are consistent with premium market expectations. The business has successfully concluded new contract negotiations with customers that ensure the future viability of the business. The exotic skins luxury market remains extremely resilient in the current global economic environment, and the operation is well positioned to remain a significant player in this value chain,” Sibanda added.

Padenga was also on a drive to reduce borrowing and the associated interest charges to sustainable levels and to improve profitability.

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