Natfoods splurges US$18m

BUSINESS REPORTER

National Foods (Natfoods), a food processing giant listed on the Victoria Falls Stock Exchange, has invested US$18m this year in expansion projects in an effort to boost revenue growth and increase output.

This was revealed by Natfoods board chairman Todd Moyo.

“The free cash was largely used to fund our expansion projects, where US$17.9m was deployed. The group’s net debt position closed the year at US$11m, a very moderate level of gearing and particularly so considering the extent of the capital investment deployed during the year,” Moyo said.

In its financial results for the year to June 30, 2023, Natfoods’ volumes were 553 000 tonnes, which was 3% less than the previous year. This was mostly because of volume losses in the flour unit as a result of sharply higher global grain prices, which reduced consumption.

The volume result in every other unit was positive, with the exception of a few brief difficulties with maize.

“Heading into the new financial year, global grain prices have reduced from the elevated levels seen at the onset of the Russia-Ukraine war, and we see a progressive recovery in volumes in the year ahead,”he said.

According to Moyo, the significantly higher raw material costs are what caused the average selling prices to rise from US$495 per tonne to US$621 per tonne year over year.

While revenue climbed by 21.7% to US$343m, the year’s profit after taxes, at US$7.53m, was 39% less than the previous year.

Operating costs increased by US$ 3.8m compared to last year, driven mainly by salary increases at factory floor level, power costs and Intermediated Money Transfer Tax (IMTT).

Natfoods was forced to use  expensive diesel generators to maintain product supply due to the decreased power availability, and real ZESA costs also increased significantly.

“Operating profit before interest, equity accounted earnings and tax for the year was US$23.4m, 16.5% below last year, in summary due to our strategy to moderate price increases and the higher operating costs. As with last year, there were significant losses on the ‘financial loss’ line, largely on account of translating the group’s various Zimbabwe dollar monetary positions, as once again consistency of product supply was prioritised to certain market channels, even when it resulted in financial losses,” Moyo said.