Dairy and food processor – Dairibord Holdings’ volumes performance for the third quarter to September 30, 2022 contracted 7 percent as the prevailing economic challenges weighed on consumer spending, therefore, reducing demand.
However, cumulative sales volumes for the nine-month period were 5 percent above same period last year driven by food and beverages segments which grew 21 percent and 12 percent respectively.
“Sales volumes for Q3 contracted 7 percent 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 operating environment for the three monthsto September 30, 2022 was mainly characterized by tight monetary policies in response to extreme inflationary challenges of the first half of the year.
“This resulted in liquidity challenges across the value chain, constraining aggregate demand and growth of the business,” said acting company secretary Maurice Karimupfumbi in a trading update for the quarter.
For the third quarter under review, liquid milk sales volumes declined 13 percent on account of raw milk supply challenges. At 19,8 million litres, raw milk utilised for the period, was 3 percent lower than prior period and accounted for 32,9 percent of the intake received by processors.
It was however not all doom and gloom as volumes started to recover in September, exiting the month at 6 percent above prior year.
Dairibord remains the processor with the highest raw milk intake and widest milk intake base in the country.
Meanwhile, Karimupfumbi said the group’s focus on export market development was evident as the regional markets responded positively in the quarter.
Export sales volumes for the quarter grew 118 percent compared to the same period last year and 101 percent for the cumulative period.
Exports accounted for 11 percent of total sales in the quarter, an increase from 5 percent last year and 9 percent for the cumulative period.
In terms of financial performance, revenue for the quarter was 39 percent above the same period last year.
On a year-to-date basis, revenue
grew 39 percent above the same period last year while operating costs went up by 38 percent on account of cost containment measures and improved operational efficiencies.
Resultantly, the operating profit margin improved to 7 percent from 6 percent in the prior period.
Management restructured borrowings to minimise the negative impact of the prevailing interest rates.
As at the end of the quarter, total borrowings were at $2,213 billion, including foreign currency loans of US$2,1 million.
In US dollar terms, the loans were at US$3,6 million.
Despite the challenging environment characterised by inconsistent utilities supplies among other problems, management is upbeat about achieving profitability which will be buoyed by the export
Efforts will also be made toward containing costs and enhancing production efficiencies.
“The company has invested in processing capacity to close the current supply gap and to take advantage of opportunities arising from national economic growth, driven by agriculture, mining and beneficiation projects in oil, gas, lithium, platinum, gold, chrome and steel.
“We target to achieve above average top-line growth, driven by increased focus on domestic and export markets, improved product availability and an optimised route to market,” said Karimupfumbi.