Dairibord to commission new plant by year-end



Zimbabwe’s largest milk processor, Dairibord Holdings, will commission a new plant by year-end, a move that is expected to drive the company’s growth strategy.

The company’s board chairman, Josphat Sachikonye, said the group’s main thrust was on volume growth to close the gap between demand and supply in most product categories and cost containment.

“The growth will be largely driven by the beverages and foods, benefitting from the commissioning of plant and equipment for additional processing capacity in the third quarter of the year,’’ Sachikonye said.

He said the group would also focus on realignment of its route to the market to increase cash receipts, local US dollar sales and exports.

In its financial results for the six months to June 30, 2022, Dairibord returned to profitability moving up 231% to ZWL$688.60m from a loss of ZWL$525m incurred in the prior comparable period.

The performance was largely driven by firm demand for the company products as overall sales volumes for the period grew 11% ahead of the same period last year.

Foreign currency accounted for 40% of total sales volume, with 8% going to export markets, while 32% went to local markets.

The company also saw an increase in the contribution of non-milk product categories as beverages dominated the sales volumes at 62%, food 10% and with the share of liquid milks to total volume 28%.

As a result of the volumes growth, revenue for the period increased by 40% to ZWL$17.12bn driven by price adjustments to preserve margins.

As milk processors intake increased by 17% to 38.96m litres from 33.42 million litres in the previous period the company made use of 12.29 million litres, that is 32% of total processor intake.

Meanwhile, the government is aiming to achieve 90 m litres of milk this year against an annual demand of 120m litres, which the country has been failing to meet.

As the country uses approximately US$28m on milk powder imports annually mainly from South Africa Sachikonye said the company is already undertaking an initiative to improve milk supply in efforts to cut on the milk import bill.

‘’The price of stock feed continued to rise in line with food inflation pressure. The group has elevated initiatives for aggressive milk supply development for low cost and high-volume milk production. The long term benefits will be competitive local milk prices, import substitution of milk powders and opportunities for export growth,’’ he said.

Zimbabwe is on course to achieve its annual target as 43.3m litres was reported during the first half, an 18% increase from 36.7m litres achieved in the prior comparative period.

In the outlook, Sachikonye said high cost and erratic supply of utilities; mainly electricity and water are expected to persist.

The decrease in the price of fuel remains welcome if sustained, he said.

Sachikonye said high cost of borrowing and short tenures will pose difficulty for businesses to bridge working capital cycle gaps and fund investments in plant and equipment for growth.

Inflationary pressures are projected to subside as a result of government efforts to stabilise the economy, he said.

“The company is also anticipating increased foreign currency inflows on the back of firm commodities prices and also a significant increase in exports,” Sachikonye said.

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