Innscor invests nearly US$200m in capex

LIVINGSTONE MARUFU

Innscor Africa Limited, a diversified and publicly traded conglomerate, has invested nearly US$200m in capital expenditures (capex) over the last three years, Business Times can report.

This substantial investment is part of the company’s broader strategic initiative to enhance its operational efficiency, strengthen its market position, and secure long-term sustainable returns. The company’s focus on reinvesting in its business operations demonstrates its commitment to innovation and growth, ensuring that it stays competitive in an increasingly complex and dynamic business environment.

According to the company’s 2024 annual report, Innscor’s board chairman, Addington Chinake, detailed the scope and nature of these investments, emphasizing how they were designed to support the company’s overarching growth strategy.

These investments aim to build on the company’s already strong base and leverage opportunities to expand its market presence.

The report outlines how these investments are not just aimed at boosting production capacity but also at diversifying the product portfolio and optimizing the company’s production processes.

Over the first two financial years, Innscor allocated US$125m towards capital expenditures across its various business units. This significant outlay was followed by an additional US$70.25m, marking the completion of a three-year, US$195m investment program.

This program is designed to support factory expansions and facilitate entry into new product categories, as part of Innscor’s ambition to deepen its footprint in the manufacturing sector.

Chinake underscored the importance of these investments, explaining that many of the initiatives have already been completed or are close to completion.

Moving forward, the focus will shift to ensuring that these investments deliver optimal returns in terms of enhanced production capabilities, operational efficiencies, and financial performance.

The company will prioritize achieving high production volumes and consolidating the gains made through its expanded operations.

“The group has undergone a period of intensive and significant investment into factory expansion while also venturing into exciting new categories,” Chinake remarked.

 “Critical mass in production volume is essential for achieving operational efficiencies and economies of scale. Consequently, volume performance will be a priority for management in the year ahead.”

This focus on volume is particularly important in light of the competitive pressures that companies face in the manufacturing sector, especially in emerging markets.

Achieving high levels of production volume allows businesses to lower unit costs, increase market share, and improve overall profitability.

For Innscor, ensuring that the newly expanded factories are operating at full capacity will be a key factor in determining the success of these investments.

Chinake also emphasized the importance of informed pricing strategies, which will be based on data-driven decision-making.

This approach will allow the company to ensure that its products remain affordable and accessible to consumers while maintaining profitability.

In the current economic climate, where inflationary pressures and consumer purchasing power are significant considerations, pricing strategies will play a crucial role in safeguarding both customer satisfaction and the company’s bottom line.

As part of its strategic focus, Innscor will continue to invest in research and development (R&D) to better understand consumer behavior and market trends.

 The company , according to Chinake, will also use advanced data analytics to optimize its pricing models, ensuring that it strikes the right balance between cost, consumer demand, and profit margins.

The ability to adapt quickly to changing market conditions is essential, especially in an economy marked by volatility and uncertainty.

Capex plans for the 2025 financial year

Looking ahead, Innscor is committed to continuing its expansion strategy with a planned US$72.77m in capex for the current financial year, which ends on June 30, 2025.

This investment will be directed towards scaling operations, consolidating the company’s position in key market segments, and ensuring that it remains competitive within the diverse sectors in which it operates.

Innscor’s business operations span a wide range of industries, including cereals, protein, dairy, beverages, and packaging. Its diverse portfolio allows the company to capitalize on opportunities in multiple sectors, providing a buffer against risks inherent in any single industry.

The company’s subsidiaries and associate companies include well-known brands such as National Foods Holdings Ltd, Profeeds (Pvt) Ltd, Baker’s Inn, Simbisa Brands, Irvine’s Zimbabwe (Pvt) Ltd, Colcom Division, Associated Meat Packers (Pvt) Ltd, Probottlers (Pvt) Ltd, Probrands (Pvt) Ltd, Prodairy (Pvt) Ltd, and NatPak (Pvt) Ltd.

Each of these subsidiaries plays a key role in contributing to the company’s overall growth.

For example, Simbisa Brands, a major player in the fast-food industry, is a critical component of Innscor’s strategy to expand its consumer goods business. Meanwhile, National Foods, which manufactures staple foods, continues to be a key contributor to the company’s growth in the cereal and protein segments.

With its diversified portfolio and continued investment in production capacity, Innscor is positioning itself to become even more dominant in the market. In doing so, the company is working to secure a strong future in a volatile and competitive economic environment.

Innscor’s solid financial performance for the year under review further underscores the success of its investment strategy.

The company reported a revenue of US$910.065m, a 13.2% increase compared to the previous year. This growth was primarily driven by volume gains across its product range, which reflects the effectiveness of the investments made in expanding production capacity and diversifying the product portfolio.

Operating profit before depreciation, amortization, and fair value adjustments (EBITDA) came in at US$86.048m, marking a 13.7% increase from the US$75.656m recorded in the previous year.

This growth in profitability demonstrates that the company’s investments are beginning to pay off, particularly in terms of boosting production efficiencies and increasing market share.

However, the company also faced increased depreciation and amortization expenses, which rose by 22% due to the substantial investments made over the past three years.

While these expenses impact short-term profitability, they reflect the long-term value created by expanding and upgrading production assets.

Innscor’s financial stability is further bolstered by its solid fixed asset base and effective working capital management.

Net gearing stood at a conservative 9.2% at the end of the financial year, highlighting the company’s prudent approach to debt management. This low level of debt ensures that Innscor has the flexibility to weather economic uncertainties while continuing to invest in its growth.

One of the most impressive aspects of Innscor’s financial performance is its cash flow generation. Operating activities generated US$106.103m, enabling the company to fund its extensive investment program without compromising its financial stability. During the year under review, a total of US$72.774m was invested in expanding operations and improving the company’s asset base.

Despite the challenging market conditions, which have been characterized by inflationary pressures, economic volatility, and policy uncertainty, Innscor managed to achieve solid volume growth across its portfolio.

This growth played a crucial role in driving profitability and ensuring the company stayed on a strong growth trajectory, even in the face of external challenges.

Looking forward, Innscor remains cautiously optimistic about the economic environment in Zimbabwe. Chinake expressed confidence that the authorities would implement consistent and transparent policies that would foster market-driven outcomes, creating a more conducive environment for business growth.

“The group is hopeful that policymakers will pursue a path of implementing consistent, clear policies that foster market-determined outcomes. This will enhance capital allocation decisions, benefiting not only Innscor but also the broader economy,” Chinake said.

For Innscor, the business environment plays a significant role in shaping the company’s strategy and investment decisions.

As Zimbabwe’s economic landscape evolves, the company remains committed to adapting its approach to ensure continued growth and profitability.

Innscor is confident that its investments in innovation, production capacity, and market expansion will enable it to capitalize on emerging opportunities, even as the economic environment presents challenges.

Innscor Africa Limited’s nearly US$200m investment in capex underscores the company’s unwavering commitment to growth, innovation, and market leadership.

 With a solid financial foundation, strategic investment plans, and a focus on operational efficiency, Innscor is well-positioned to capitalize on emerging opportunities in Zimbabwe’s manufacturing sector.

As the company continues to execute its ambitious expansion plans, it remains a significant player in the country’s economic development, driving growth, job creation, and innovation in key industries.