CFI profit drops
LIVINGSTONE MARUFU
Agro-industrial concern, CFI Holdings profit shrunk 8% to ZWL$218.1m during the year to September 30, 2020 from ZWL$235.9m reported in the comparative prior year due to the impact of hyperinflation and drought despite a rise in revenue.
The group said its performance was worsened by the impact of Covid-19 lockdown restrictions which disrupted the supply chain, capping a turbulent 2020.
“The trading environment was marked by operational and economic challenges.
In particular, hyperinflation, an unstable exchange rate and limited availability of foreign currency in the formal banking channels for the greater part of the year,” board chairperson Itai Pasi said in a statement accompanying the financial results.
She added: “This was exacerbated by drought induced shortages of cereals used in the stockfeeds manufacturing processes and in the last half of the year, the Covid-19 pandemic.
The prevalence of multiple exchange rates distorted operating costs and product pricing.
The inflationary environment and drought generally impacted negatively on consumer disposable incomes thereby reducing discretionary household spending.”
She said the 2019/20 local harvest of maize and soya declined due to reduced plantings and poor weather.
The local shortage of these raw materials and the need to import the same is projected to persist until June 2021, Pasi said.
Revenues for the group increased 30.1% to ZWL$3.4bn from ZWL$2.6bn in 2019 driven by the consolidation of Crest Poultry Group revenues after it come out of the judicial management.
Retail operations contributed 99% of the revenue while farming contributed 1%.
CFI is also working on taking its unit, Victoria Foods, out of receivership, as the company’s complete turnaround strategy gathers momentum.
In the past few years, the group found itself trapped in a dark hole forcing itself to under sale large tracts of land at a very low price to survive but has since started reversals to realign the group on a strategic growth path.
Pasi said the group has set its determination to salvage the unit from the murky waters.
“The group continues to pursue the exit of Victoria Foods from judicial management and will give an update in due course.
The return of this company to the group’s control after more than four years under judicial management will mark an important milestone in the group’s turnaround efforts and the group’s resurgence as a pillar in underpinning food security in the economy,” she said.
Last year, the board was pushing the exit to happen before the financial year ending September 30 2020 but Covid-19 disruption made the company to wait further.
In 2016, the High Court granted an order to have Victoria Foods and stock-feed producer, Agrifoods, placed under provisional judicial management after noting it required about US$12m for recapitalisation.
Various creditors had obtained orders and writs of execution against the company assets.
