eBusiness Weekly
Enacy Mapakame
Depressed consumer spending due to the obtaining economic headwinds weighed on CFI Holdings Limited’s performance for the half year to March 31, 2023.
The group recorded revenues for the half year increased marginally by 13 percent to 34,09 billion compared to $30 billion recorded during the same period in the prior year.
“This slow growth is reflective of depressed consumer spending power during the half year period,” said chairman Itai Pasi.
“Hyperinflationary pressures maintained during the first six months, which ended 31 March 2023, making the economic environment generally difficult on the back of falling consumer buying power.
“This was aggravated by the pass-through negative effects of the war in Ukraine on global supply chains and the prices of key imported commodities.
“The trading environment also witnessed the resurgence of acute power supply shortages affecting the country’s productivity levels and increasing the costs of doing business,” she said.
During the half year period, retail operations contributed 79,8 percent as the segment remains the group’s cash cow, although this was a decline from comparable period’s 84,8 percent.
The milling operations (Victoria Foods) contributed 18 percent and farming operations accounted for 2,2 percent of group turnover.
Selling price adjustments lagged behind expenses as selling prices were determined in line with official banking exchange rates whilst expenses increased in real terms and were pegged in US dollar, converted by suppliers and/or providers to ZWL at prevailing parallel market exchange rates.
Pasi added the group also incurred unrealised exchange losses of $6,6 billion on its foreign currency denominated loans and creditors.
As a result, the group posted a loss before tax of $9,13 billion against a profit of $1,14 billion for the comparative prior year period.
During the period, the group invested $872,53 million compared to $111 million into property, plant and equipment, mostly in company motor vehicles renewals and capitalised Victoria Foods plant spares, as well as center-pivot irrigation equipment at Glenara Estates.
In terms of segment review, Farm and City Centre (FCC) had a difficult half year due to prevailing multiple exchange rates, high interest rates and reduced consumer spending, thereby decreasing key revenue driver volumes.
The division, as with a number of the larger corporates in the country, suffered loss of value on US dollar settled sales as a result of the progressively widening gap between the interbank exchange rates and the unofficial rates.
“The lower interbank exchange rate was used to credit accounts in respect of the mandatory liquidated funds,” said Pasi.
Agrifoods under the milling operations recorded sales volumes were a marginal 4 percent lower than prior year due to market liquidity challenges and declining disposable incomes in the economy.
Availability of maize and soya beans was fairly stable during the period. Agrifoods continues to reassert its presence in the market and efforts to improve demand for its products are ongoing.
At Victoria Foods, the flour and maize mills operated at capacity utilisation levels of 50,6 percent and 14 percent respectively, weighed down mainly by intermittent power cuts.
In addition the maize mill was also seriously affected by raw materials supply challenges during the period.
Under the poultry division, Crest Poultry group’s other units, being Crest Breeders, Hubbard Zimbabwe and Suncrest Chickens, remained under care and maintenance during the period. Joint ventures leveraging the group’s poultry infrastructure and brands are still being pursued.
The group is putting in place measures to cushion itself against the harsh environment.
“In view of the challenging economic conditions which prevailed during the period, and have since worsened thereafter, the group foresees the trading environment remaining challenging and complex in the medium term.
“Proactive management practices will therefore be employed to ensure the Group’s survival in these difficult times,” said Pasi.
