Dairibord upbeat about growth

Milk and dairy product producers this year embarked on dairy heifer importation schemes to boost milk production

Business Editor
Dairibord Holdings Zimbabwe chief executive Mr Antony Mandiwanza says there is potential for growth in the economy in spite of the challenges being currently faced. Mr Mandiwanza forecast a positive out-turn for Dairibord in the current financial year even in the face of weakening aggregate demand seen through negative inflation and a slowdown in the gross domestic product (GDP) growth rate.

“We are not immune to the challenges facing the country. High costs of production are making products uncompetitive both locally and on the export market.

“Further to that consumers are down trading due to declining disposable incomes and the growth of the informal sector. We do however see light. Already the first quarter is trending in the right direction.”

The group expects a 2 percent growth in raw milk intake, volumes growth of 8 percent, revenue increase of 4 percent and 4 percent gain in operating profit margins. Dairibord will also spend $10 million in capex.

Mr Mandiwanzwa said the group had embarked on a restructuring and rationalisation process which is now bearing fruit. The group had anchored its performance on five business pillars; endurable brands, technology for quality and efficiency, milk supply, cash and cost management and human capital.

“The journey we started is beginning to bear fruit. We believe the business structure we had running was not going to take us into the future. However, remember it’s not a one-day wonder, we have to patient.”

He said the company had laid a solid foundation for the future after a $9,9 million capital spend last year. Milk supply will continue to receive attention 500 cows that will add 200 000 litres to milk intake. The group will also leverage on investments made in 2014 to support both domestic and export markets.

In the year to December volumes picked up 8 percent to 70,4 million litres while the top-line was flat at $99 million.

The group overturned an operating loss to report a profit in the year at $1,4 million from a negative $1,8 million in 2013.

Earnings before interest tax, depreciation and amortisation EBITDA was up 202 percent to $5,36 million from $1,77 million.

The group had experienced a strong rebound in the second half overturning the half year (H1) loss. Volumes in the first half were down 6 percent but investments in key lines and the introduction of Pfuko Maheu saw the group report a 21 percent increase in the second half.

There had also been good performances on Chimombe milk and Aqualite water had seen a recovery. Revenue which was down 11 percent in H1 grew 8 percent in the second half with the dilutive effect resulting in a one percent decline.

“We have had sustainable milk supply (although intake was down 2 percent) while the key brands are occupying number one or two positions in their categories”

The group had managed to perform within its forecasts.