Natfoods prioritises raw materials

TAURAI MANGUDHLA

National Foods Limited (Natfoods) will prioritise replacing key raw materials amid a tight liquidity situation and weakening of the local dollar, group CEO Michael Lashbrook has said.

The company joins many large corporates and small enterprises whose daily headache is replenishing stocks for raw materials and supplies due to foreign currency shortages. A huge exchange rate risk is taking a toll on business as the local dollar slides.

Although the company currently holds a solid pipeline of raw materials, Lashbrook said in the company’s first quarter update for the period July to September 2019 that subdued “local liquidity and continued devaluation mean that replacement of this pipeline will need to be a key focus area for management in the months ahead”.

The company met its expectation in terms of profitability during under review. But Lashbrook said sustained inflation further restrained consumer spending power, impacting volumes across all categories. The most heavily impacted were flour volumes which closed the reporting period 50% below last year, on the back of intermittent supply and increased cost of wheat.

“Volume performance in the remaining categories was largely reflective of consumers down-trading in favour of more affordable commodities, with groceries (mainly rice and salt) closing 47% down, snacks and treats 37% down, and stock feeds 25% down,” Lashbrook said.

The company said the maize category was the least impacted, with volumes for the quarter closing 5% below last year’s, as subsidies on raw maize assisted maize meal affordability, driving consumption. The company has initiated an importation programme for both white and yellow maize to cover the expected deficit in the first half of 2020.

In October, the company launched a new cereal product under the Pearlenta NutriActive brand, after years of research and planning. The product has been well received by the market.

Natfoods launched “Allegros Popticorn” and “Iris” cream biscuits in the snacks and treats category during the quarter. “Market acceptance of these products has again been encouraging, further complementing our existing snacks and treats offering,” Lashbrook added.

Related Articles

Leave a Reply

Back to top button