eBusiness Weekly
Business Writer
Dairibord Holdings says it is generating at least US$3,2 million from domestic nostro sales and exports, which has helped in meeting the Group’s foreign currency requirements.
Antony Mandiwanza, the group’s chief executive, told analysts on Wednesday that the Reserve Bank of Zimbabwe (RBZ) foreign currency auction system has failed to meet the group’s foreign currency needs.
“Our appetite is far from being quenched by the auction system. As a result, we do roughly US$3 million from exports and domestic nostro while getting from the auction about US$800 000 to $1 million per month,” he said in a presentation of financials for the year ended 31 December 2021.
He said during the year under review, about 46 percent of the company’s foreign currency requirements came from the auction system while the balance was from domestic nostro and exports.
“The support from auction was consistent during the start of the year and slowed down in the 3rd quarter, therefore we will continue to push the number on domestic nostro and exports,” he said.
He indicated that the group currently has three to six months cover of imported raw material to cover any supply chain disruptions that may arise.
Mandiwanza said the company’s revenue for the year at $10,63 billion grew by 190 percent on the back of significant volume, growth and moderate price adjustments.
Raw milk utilised grew a marginal 1 percent to 27,488 million litres while sales grew 48 percent to 94,185 million litres.
“Some of our key volume drivers, pfuko and cascade, we experienced supply bottlenecks and therefore the capacity was constrained, we would have done more.”
Mandiwanza said the profit margins were constrained during the year because of the costs issues and on foreign currency, the group harnessed the nostro transactions, exports and the auction system.
On the milk supply side, Mandiwanza noted that raw milk is a key pillar of the business and the group still commands the larger chunk of 35 percent out of 15 processing entities in the market.
“If we look back in the best year, we produced 256 million litres of milk per annum, but during the year under review 79 million litres.
“The massive decline is not matching demand in the market, therefore the gap between the two has been closed partially through imports of semi processed products such powders, cheese,” he said.
Mandiwanza said the per capita consumption is currently at 8 litres compared to historical 25 litres present opportunity in the dairy sector.
The country has an annual milk demand of 140 million litres while the national herd is at 40 000 compared to 190 000 at peak.
Mandiwanza noted that milk production has had slight stable growth from 2017 to 2021 far from the milk that we need to meet market demand.
In terms of portfolio volume performance, liquid milks grew 10 percent to 30 million litres, foods 34 at 38 million litres and beverages 84 percent at 92 million litres.
He said the growth has largely been driven by growth on exports and the group continues to build on it.
In 2021 liquid milks export volumes contribution was 32 percent, Foods 9 percent and beverages 59 percent.
Mandiwanza noted that 20 percent of volume was sold in USD in 2021. He said investments in property, plant and equipment (PPE) will support growth into the future while investments in inventories to support volume growth and ensure consistent product supply.
Looking ahead, he said raw milk production will grow to 90 million litres in 2022 because of the efforts that are on the ground.
“What we are seeing on the milk supply are big greenfield projects. There are quite a number of new entrants who have invested towards growing milk production and they have very ambitious programs that will grow production,” he said.
He added that going forward for Zimbabwe, a sustainable low cost milk producer price is needed in order to be competitive and be able to play in the bigger market space.
Mandiwanza noted that 20 percent of volume was sold in USD in 2021. He said investments in property, plant and equipment (PPE) will support growth into the future while investments in inventories to support volume growth and ensure consistent product supply.
The Board resolved to declare a dividend of 41 cents per share for the year ended 31 December 2021, payable on or about the 13th of May 2022.
