BUSINESS REPORTER
Zimbabwe’s largest milk processor, Dairibord Holdings Limited says the tight monetary policies in response to extreme inflationary challenges have resulted in liquidity challenges across the value chain, constraining aggregate demand and growth of the business.
The development comes at a time when the whole economy is at standstill due to the liquidity squeeze in the market resulting in weak purchasing power.
In a third-quarter trading update that ended September 30, 2022, Dairibord acting company secretary Maurice Karimupfumbi said despite the stability, exchange rate disparities impacted competitiveness and suppressed demand in the formal trade, as consumers shifted to informal trade.
“Sales volumes for Q3 contracted 7% compared to the same period last year. Performance was affected by the changes in the operating environment that reduced sales volumes in July and August. The volumes recovered in September, exiting the month at 6% above the prior year.
“The cumulative sales volumes for the nine months were 5% above the prior period with foods and beverages growing 21% and 12% respectively,” Karimupfumbi said.
Liquid milk sales volumes declined 13% on account of raw milk supply challenges and raw milk utilised for the period at 19.8m litres, was 3% lower than the prior period and accounted for 32.9% of the intake received by processors.
The group focused on export market development with regional markets responding positively in the quarter.
“Export sales volumes for the quarter grew 118% compared to the same period last year and 101% for the cumulative period. Exports accounted for 11% of total sales in the quarter [5% in Q3 of 2021] and 9% for the cumulative period [4% in 2021],” Karimupfumbi said.
Revenue for the quarter in inflation adjusted terms was 39% above Q3 2021
Year-to-date inflation-adjusted revenue was 39% above the same period last year while revenue for the cumulative period grew by 39%, operating costs grew by 38% on account of cost containment measures and improved operational efficiencies.
Resultantly, the operating profit margin improved to 7% from 6% in the prior.
In the outlook, the company will focus on operational efficiencies and cost containment and target to achieve average top-line growth, driven by an increased focus on domestic and export markets, improved product availability and an optimised route to market.
