eBusiness Weekly
Business Writer
Food processing giant, National Foods Holdings Limited, is paying attention to cost cutting while optimising production as the group is expected to see a continued volume recovery in the financial year 2022, in line with analysts’ forecasts.
This comes as volumes for the half year to December 31, 2021 increased 15 percent compared to the same period in the prior year.
Among other strategies, the group is cutting on raw materials costs through increased support towards contract farming. During the half year period to December 31, 2021, the group increased hectares planted under its contract farming initiatives by 22 percent, compared to the same period in the prior year.
The group has already indicated various products grown under its contract farming scheme now constitute a significant portion of the group’s raw material requirements.
Chairman, Todd Moyo, said the group continues to keenly support contract farming of maize, soya beans, wheat, sugar beans, sorghum and popcorn.
“During the current summer season around 11,000 hectares have been planted, representing a 22 percent increase compared to last year.
“In addition to this, 27,000 tons of wheat was delivered on last winter’s cropping program. The various products grown under this program now constitute a significant portion of the Group’s raw material requirements,” said Mr Moyo in a statement accompanying the group’s financials for the half year period.
Moyo added the group will also pay attention to the cereals category with an US$4 million investment made towards this business segment.
He said: “As previously advised, the Board has approved further investment into the cereal category which will allow the group to further expand its repertoire of breakfast cereals and extruded products.
“This investment amounts to US$4 million and is set to avail an exciting range of affordable and nutritious breakfast cereals to the market. The project is on track to be commissioned mid 2022.”
According to the group, the first phase of the cereal investment has seen the introduction of a variety of products over the past year including Pearlenta Nutri-Active instant maize porridge, Better Buy Soya Delights, and more recently a Smart Carbs range of instant breakfast cereals.
The Smart Carbs cereal range is derived from traditional grains such as sorghum and millet and has been developed with the health conscious consumer in mind.
During the half year period, total volume for the period increased came in at 304,000 tons, which was 15 percent firmer compared to the prior period although there was however, a noticeable slow-down in volume momentum over the period as inflation picked up, with year on year volume growth of 24 percent in the first quarter and only 8 percent in the second quarter.
Revenue for the period rose 96 to $24,9 billion, driven by volume growth and inflationary price increases. Gross profit grew by 81 percent below revenue growth, largely due to the inflationary driven gains that occurred in the prior year.
Market watchers expect the group to maintain the upward trajectory going forward. For the full year, this growth should come from the increased demand during the festive season which is also generally characterized by increased consumer spending.
