DAIRIBORD Holdings Limited’s financial results for the year-ended December 31, 2025 reflect a business transitioning from a capacity-constrained operator into a volume-led growth story, underpinned by significant capital investment and improving operational momentum.
While top-line growth and pre-tax earnings point to early stage recovery, pressures around pricing, and taxation continue to weigh on earnings growth.
Volumes lead, pricing softens
Revenue for FY2025 increased by 8% to US$137,4 million, trailing volume growth of 12%. This divergence highlights that revenue expansion was primarily volume-driven, while pricing acted as a drag.
The decline in average selling prices reflects a shift in both product mix and route-to-market strategy. Management prioritised channels that support volume growth and cash generation, particularly the general trade segment, now contributing over 40% of sales.
Segmentally, Beverages and Foods recorded strong growth of 17% each, driven by brands such as Cascade, yoghurts, ice cream, Pfuko Maheu and Natural Joy.
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In contrast, Liquid Milks volumes declined by 5%, largely due to plant downtime associated with capacity upgrades in the final quarter.
The portfolio mix continues to tilt towards beverages, which now account for 64% of total volumes, while liquid milks declined to 26% and Foods remained at 10%. This shift toward higher volume, lower priced categories partly explains the pressure on realised pricing.
A notable structural shift is the increasing dollarisation of sales. Volume sold in United States dollars rose to 96%, up from 83% in FY2024, improving revenue quality and reducing currency risk.
Raw milk utilisation grew marginally by 1% to 42,5 million litres, reflecting ongoing supply constraints within the domestic market.
With national demand estimated at approximately 190 million litres against supply of just under 122 million litres, reliance on imported milk solids remains a key feature of the cost structure.
Gross profit margin declined marginally to 24,85% in FY2025 from 25,03% in FY2024. While the movement appears modest, margins remain structurally below prior levels of 31,6% in FY2023 and 27,6% in FY2022.
This compression reflects a combination of product mix dilution and elevated input costs. Production costs increased by 9%, driven by higher utilities as well as production-related repairs and maintenance.
The relative stability year-on-year suggests operational efficiencies are partially offsetting cost pressures, but the group is yet to recover the margin profile seen in yesteryears.
Operating profit margin remained largely unchanged at 4,93% in FY2025 compared to 4,91% in FY2024.
While stability year-on-year suggests cost discipline, margins remain significantly below historical levels of approximately 10% achieved in both FY2022 and FY2023.
The sharp decline from historical double-digit margins highlights the absence of operating leverage, with incremental revenue largely absorbed by the cost of supporting distribution expansion and market penetration.
Profit before tax margin improved to 3,86% in FY2025 from 2,52% in FY2024, largely supported by a moderation in finance costs. However, the improvement remains below historical levels, with margins previously reaching approximately 6% in FY2022 at lower revenue base.
Notably, finance costs have historically been a significant drag, accounting for around 8% of revenue in FY2023, and remain a key sensitivity given increased borrowings.
At the bottom line, net profit margin declined to 2,27% from 2,98%, remaining below 3% recorded in FY2023 and 4,4% in FY2022.
The key driver was a sharp increase in the effective tax rate to approximately 42%, largely due to non-deductible expenses such as IMTT and the sugar tax. These costs appear structural, implying continued pressure on net profitability unless mitigated.
The balance sheet reflects a business in an expansion phase. Property, plant and equipment increased significantly following US$10,7 million in PPE additions.
These investments target long-standing constraints that have limited the group’s ability to meet demand, with key projects commissioned in the final quarter of FY2025 and expected to contribute from FY2026.
However, this expansion has been debt-funded. Total interest-bearing borrowings (including overdrafts) increased to US$15,33 million from US$7,79 million. This places emphasis on execution, particularly the ability to convert capacity into profitable growth.
Dairibord declared a final dividend of 0,19 US cents per share, marking a return to shareholder distributions after a prolonged hiatus. At a share price of 8,73 US cents, as of April 1, this implies a dividend yield of approximately 2,18%.
The stock is currently trading at a P/E multiple of 11x, above its historical level of 6.1x in FY2023, and the highest among consumer staples on the ZSE, compared to peers such as Delta (6,35x) and Afdis (7,32x).
Outlook, conclusion
Dairibord’s FY2025 results highlight a business at an inflection point, with volume growth and significant capacity investment laying the foundation for future expansion.
However, margins compression and elevated tax pressures underscore the challenges inherent in this transition.
The investment case hinges on execution. If the group successfully leverages its expanded capacity to drive volume growth, improve efficiency and strengthen cash generation, the current valuation premium may be justified.
Taimo is an investment analyst with a talent for writing about equities and addressing topical issues in local capital markets. He holds a First Class Degree in Finance and Banking from the University of Zimbabwe. He is an active member of the Investment Professionals of Zimbabwe community, pursuing the Chartered Financial Analyst charter designation.