LIVINGSTONE MARUFU
Listed agro-industrial concern, National Foods Limited (Natfoods) expects wheat output from contract farming to increase by half to 30 000 tonnes this winter season from 20 000 tonnes achieved last year on the back of an availability in power supplies and water for irrigation, an executive has said.
Natfoods CEO Michael Lashbrook told Business Times that the expected output will boost the company’s production levels.
“For the current winter season 5 800 hectares of wheat have been planted. Harvesting is underway and we expect about 30,000 tonnes,” Lashbrook said.
In its financial results for the year to June 30, 2021, Natfoods reported a 97% decline in profit to ZWL$72.4m from ZWL$2.19bn recorded during the prior year due to the effects of Covid-19 induced lockdown.
The volumes for the period increased 15% to 525,000 tonnes compared to the prior period and this was achieved in spite of the disappointing result from the maize unit, where volumes declined by 32% largely on the back of intense competition from imported maize meal and the discontinuation of the subsidy program.
Volumes excluding maize, the year on year volume growth across all categories was 48% due to improved consumer demand and a steadily improving market presence across the portfolio.
Revenue for the period increased to ZWL$33bn from ZWL426bn in the prior period on the back of the volume growth as well as the impact of inflation.
The maize unit had a disappointing year, with performance being impacted by the normalisation of the market post the removal of the subsidy scheme as well as a proliferation of cheap imported maize meal, notably from South Africa.
Operating expenditure increased by 327% as costs normalised in real terms with the slowing inflation.
The group’s financial position remains in a healthy position with very moderate levels of gearing, with net debt of ZWL$591m as at year end.
Although gearing is moderate the increase in interest rates and lower inflation has meant that working capital models and cash flow management once again become key priorities.
Deposits were paid for both the new Bulawayo Flour mill and the new Cereal project in the latter part of the year and the company is well positioned to continue to fund its pipeline of new projects.
The volumes for the flour unit increased by 43% compared to the prior year and this growth was achieved on the back of strengthening consumer demand.
While growth occurred in both the baker’s and prepack flour segments it was especially strong in prepacks as consumers resorted to home baking with the Covid-19-induced lockdowns and restrictions on movement in place.
The board has approved the implementation of various plant upgrades in the coming year to the Aspindale plant as part of a three year phased upgrade which will significantly modernise the existing plant which was installed in the early 90s.
National Foods continues to keenly support contract farming of maize, soya beans, wheat, sugar beans and popcorn.
During the current summer season over 9,000 hectares were planted with the tonnage harvested amounting to 55,000 tonnes, mainly of maize.
