Natfoods seeks US$40m to beef up stocks

LIVINGSTONE MARUFU

Zimbabwe Stock Exchange listed agro-processing firm, National Foods Limited (Natfoods), requires at least US$40m to import 110,000 tonnes of maize and wheat in the first half of this year as the company moves to sustain its operations, a company executive said.

Natfoods CEO Mike Lashbrook told Business Times that there is a deficit in local production and food processors have to turn to imports to cover the shortfall.

He said Natfoods sees an opportunity to expand its market share and exploit new opportunities in the market.

“We expect to import around 60,000 metric tonnes of maize and 50,000 metric tonnes of wheat between now and June and the value of these imports will be just over US$40m,” Lashbrook said.

The plan for more imports comes at a time when Natfoods volumes declined in 2020.The forex would be sourced from the auction system and own resources.

“The company is using a portion of its own resources as well as forex from the auction system to fund these imports.

As you know our customers have the option to settle in foreign currency should they choose and these funds are being deployed to the importation of raw materials,” Lashbrook said.

He said reserves at household level have by now reduced, further increasing demand for maize.

This pressures the firm to mill more maize as customers for mealie meal increase due to depletion of household reserves across the country. Under its contract farming project, Natfoods, planted 10 000 hectares of soya beans and maize for the 2020/2021 summer cropping season as part of efforts to ensure food security and productivity in the farms.

Lashbrook is optimistic of a bumper harvest with the good rainfall experienced across the country.

“From our perspective it appears that the preparations for the current season have been comprehensive, and with the good rains we are positive that there will be an excellent summer harvest,” Lashbrook said.

Natfoods harvested close to 200 000 metric tonnes of wheat last year, the highest crop volumes achieved in the past few years. In its financial results for the year ended June 30,2020, Natfoods’ revenue was up 52% from the previous year to ZWL$12.79bn, reflective of higher selling prices following the progressive removal of most grain subsidies.

Gross margin dollars increased by 48%, below the increase in revenue as the group focused on competitively pricing its products.

Operational expenditure increased by 45% compared to 2019, with the optimisation of the group’s cost structures remaining a key priority.

“As a result, profit after tax increased by 75% to ZWL$1.58bn.

The group continued to focus on protection of its balance sheet in view of the prevailing inflationary environment,” board chairman Todd Moyo said in a statement.

“The management and funding of raw material pipelines remained a key priority, both in view of the constrained local liquidity as well as the extended lead times brought about by the Covid19 pandemic.

As a result of these efforts, the group currently has adequate pipelines of all key raw materials to trade sustainably in the year ahead.”

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