ZIMBABWE – Zimbabwe’s leading milk processor, Dairibord Holdings, has recorded a 48% jump in sales volumes in the year ended December 2021, the highest in five years.
The jump to 94.2 million litres was largely driven by significant growth in the Beverages segment, which registered 84% in volume growth of Pfuko and Cascade. Its liquid milk grew by 10% and Foods jumped by 34%.
“Despite the strong volume growth, the business was not able to meet strong consumer demand due to production capacity constraints and Covid 19 supply side disruptions,” said Dairibord.
Revenue for the year grew by 55% over prior year to ZW$13.17 billion (US$36.39m), driven by the 48% growth in volume and moderate upward price adjustments of 5%, which were well below the inflation rate.
In a statement accompanying the company’s financial results for the period ending December 31, 2021, Dairibord said 20% of the sales were in foreign currency, an increase of 16% from 2020.
Meanwhile, the operating profit increased to ZW$791 million (US$2.18m), a growth of 1009% above prior year.
The group achieved a profit after tax of ZW$61 million (US$168,000), an increase of 149% above prior year, despite cost of sales increasing by 50% mainly driven by the depreciation of the Zimbabwe dollar as well as increases in commodity prices, petroleum-based packaging materials, milk powders and freight costs.
Its focus on cost management and cost containment of overheads resulted in an improved operating profit margin for the year of 6% up from -1% in prior year.
In the outlook, the company said it was localising supply chains of key inputs through a sustained focus on smart partnerships with key suppliers, cost reduction, cost containment and enhanced working capital management to defend margins and preserve value.
Although the authorities are projecting a positive performance in 2022, the poor start to the 2021/2022 summer agricultural season, erosion of consumer disposable incomes due to escalating inflation and exchange rate disparities heighten the risk of a slowdown in growth compared to 2021.
The geopolitical effects resulting from the Russian-Ukraine war, are expected to further disrupt global supply chains, exert upward pressure on inflation and result in slowdown in economic growth.
Dairibord said it would take advantage of market opportunities by leveraging on the US$2.8 million investment in property, plant and equipment made in 2021 to increase availability of foods and beverages.
The company invested in additional Ultra-High Temperature (UHT) filling and packing equipment, which will double capacity for cartonised beverages by year-end.
This followed the injection of US$1.5 million into an ammonia plant to see growth in ice-cream production, improving product portfolio mix and margin performance going forward