eBusiness Weekly
Enacy Mapakame
Crocodile skin exporter Padenga Holdings Limited anticipates significant improvement in skin quality following prevention and control measures as the group targets over 83 000 premium quality skins this financial year.
The Zimbabwe operation should see 46 000 premium quality skins harvested while 37 324 skins should be harvested from the United States of America operations.
This comes as skin quality was compromised last year due to skin diseases and blemishes. Chief executive Gary Sharp said skin quality in 2018 was negatively impacted by small defects resultant from legacy disease issues.
As a result, there was stock held back in pens for as long as possible to maximise quality while harvesting was delayed well into the final quarter.
In the United States of America operation, a skin condition was identified on the alligator stock and did not clear by year-end. The affected alligators were harvested in the first quarter of 2019 to create space for the younger crop.
The quality grade attained on these skins was below expectation. Resultantly, a fair value expense of US$2,6 million was processed for these skins at year-end.
Management is, however, upbeat of improving the quality on the back of strong initiatives put in place. Among them, the group resurfaced 308 pens to create smooth, clean robust floors that are a primary deterrent to skin defects.
“We have invested significant financial and human capital into revising and strengthening operational processes, systems and oversight as part of initiatives to address the skin quality challenges,” said Sharp at an analysts briefing in the capital last week.
“Additionally, we have also appointed a dedicated skin quality assurance manager to bridge the information gap between operational events on the farms and outcomes at the customer’s tannery,” he said.
Investment into a full-time research and development team established to improving skin quality, herd health, production efficiencies and welfare/husbandry should start to bear fruit in this financial year.
During the year to 31 December, 2018, Padenga’s revenue jumped 40 percent to US$42,5 million from US$30,3 million achieved in the prior year.
The Zimbabwe crocodile business was the dominant contributor to both revenue and profitability accounting for 92 percent of the group’s revenue. This is despite inflationary pressures that spiked cost of inputs.
Operating profit went up 30 percent to US$18,1 million while profit before tax ticked 9 percent to US$17,7 million.
Profit for the year remained flat at US$12,7 million and basic earnings per share improved to US2,43 cents from US2,4 cents.
Operating profit margin and attributable profit margin went down to 43 percent from 46 percent and 30 percent from 43 percent respectively due to another line of business the company ventured into with lower margins.
During the period under review, the Zimbabwe operation, total skins revenue marginally moved up to US$27,9 million from US$27,4 million. Total meat revenue went down to US$831 878 from US$1,018 million in the prior year.
Average skin size was maintained at 34,4 cm in line with customer requests while total skins harvested in Zimbabwe went down 6 percent to 43 184. Himalaya skins produced went up to 1 877 from 1 818 in the prior year.
Crocodile stock in Zimbabwe was at 109 133 from 106 013 in the prior year. Of these figure 47 149 are yearlings (12 months), 38 701 rearings (24 months), 18 276 rearings (36 months), 1 066 immature breeders and 3 941 mature breeders. In terms of egg production, 68 percent were domestic eggs while the remaining 32 percent were wild eggs.
For the United States of America (USA) business, total skins revenue amounted to US$3,2 million from US$1,7 million in the comparable year. The USA operation recorded an 85 percent increase in alligator sales while volumes went up 21 percent against prior period to 13 500 skins.
Sharp said the group would continue working towards enhancing quality, cut on blemishes in line with customer needs.
“We have continued investment into initiatives that will eradicate skin diseases, improve animal welfare, achieve good husbandry compliance and enhance skin quality.
“Quality demands are continually increasing, a function of Luxury Brand ethos to only use ‘the best of the best’,” he said.
