BUSINESS REPORTER
Zimbabwe’s largest milk processor, Dairibord Zimbabwe Limited swung into a ZWL$ 4.65bn loss in the six months to June 30, 2023 from a profit of ZWL$7.87bn, hit by foreign exchange losses, Business Times can report.
Board chairman Josphat Sachikonye revealed this, stating that the devaluation of the Zimbabwean dollar against the US dollar in May and June led to significant foreign exchange losses that were brought on by hard currency loans.
“This resulted in high foreign exchange losses of ZWL$27.49bn, which impacted the operating performance which increased the finance costs. The foreign exchange losses weighed down the performance of the business to churn out a loss for the year of ZWL$4.65bn,” Sachikonye said.
He said the group was seized with efforts to reduce the exchange risk arising from foreign currency denominated liabilities and to strengthen cost-containment measures in a bid to improve operating margins and maximise shareholder value.
“The company experienced significant cost increases on account of imported inflation and price distortions arising from exchange rate movements. There were sharp increases in material costs and utilities,” he said.
Despite a loss, the company recorded a 56% revenue increase to ZWL$306,04bn during the period under review from ZWL$195.82bn on the back of increased volumes.
Milk supply development remains a key focus for the group with a team dedicated to attracting and developing small, medium and large-scale farmers for increased national raw milk production.
According to the Dairy Services Unit of the Ministry of Agriculture, raw milk utilised by processors during the period grew 9.19% to 42.078m litres and the largest milk processor utilised a huge chunk from there.
“Dairibord utilised 14.226m litres of this volume, a laudable 16% increase over the same period last year, which accounted for 34% of total raw milk received by processors. The sustained growth continues to buttress Dairibord’s apex position as the largest dairy processor in the nation.
The group’s cumulative sales volume performance was ahead of the comparative period last year as total sales volumes for the period grew by 9%.
Liquid milks’ sales volumes recorded a 6% growth largely spurred by a 32% growth in Chimombe volumes.
Beverages recorded a notable 16% uptick in sales volumes, fueled by capital investments made in this revenue segment which improved production throughput and sales.
However, food volumes declined by 23% when compared to the prior year, due to inconsistent supply of quality inputs affecting peanut butter and salad cream, and depressed demand for ice creams.
The quality issues have since been resolved and the revenue segment is poised for a significant rebound in the second half of the year.
“64% of the volumes sold during the period were in foreign currency, which was a significant improvement from the 39% recorded in the comparative period, an attestation of the improving foreign currency generation ability of the business.
“The notable volume growth, on the back of the group’s strong brand equity, and moderate price adjustments…,” Sachikonye said.
