Dairibord’s configuring work 70pc complete
Herald 25 August 2017
Business Reporter
Dairibord has completed 70 percent of the work around configuring its business model to a much learner structure, financial director Mercy Ndoro has said.
Responding to emailed questions, Ms Ndoro said the group has integrated three operating SBUs in Zimbabwe into one company Dairibord Zimbabwe. “This was with effect from 1 January 2017. This means the group has reduced the number of operating subsidiaries in Zimbabwe to one from three,” she said.
Before the consolidation, the group used to separately run Lyons, Dairibord Zimbabwe and NFB Logistics to the extent that its vendors would not carry products for both Lyons and DZPL.
Ms Ndoro said following the integration of operations into one entity, the organisational structures have also been integrated effective 1 January 2017.
“This resulted in elimination of duplications along the value chain for core operations shared services such as human resources, finance, audit, procurement and IT,” said Ndoro adding that manning levels have also decreased by 10 percent as at end of May 2017 against the obtaining levels in December 2016.
Ms Ndoro added that sales and distribution activities have also been consolidated. “Distribution depots in Harare, Gweru, Byo and Chinhoyi are now fully consolidated while excess depots have been closed where there were duplications.”
Ms Ndoro said the excess depots are now available for leasing to third parties. She added that following the consolidation of depots and selling points, product deliveries to the market have now been consolidated and delivery trucks now carry products for both former Lyons and DZPL.
“We have reorganized our sales force to handle the consolidated portfolio and drive all brands in the market,” said Ndoro. She, however, said consolidation of factories is still in progress and will be completed by end of year.
“The phase to be completed this year is focusing on lines with common processes and products. Beyond 2017, the ultimate goal is to consolidate manufacturing operations and further improve manufacturing efficiencies.
‘The expected outcome from all the above initiatives is reduction in overheads with annual savings projected at plus or minus $2 million with a rationalisation cost of $1 million in year 1. As at half year ended June 30, 2017, restructuring costs already amounted to $865 508.
The restructuring exercise to align overhead costs to revenue, which was with effect from January 1, 2017 seems to be already paying dividends with the group managing to turn its operating loss of $2 million for the half year ended June 30, 2016 into a profit of $212 211 for the half year ended June 30, 2017.
The restructuring costs of $865,508 resulted in the group reporting a loss before interest and tax of $653 297 against a loss of $2 million prior year comparative.
Going forward the business focus will remain on consolidating the benefits of the initiatives started in the first half of the year.
The group will focus on refinement of process efficiencies along the value chain taking advantage of the consolidated operating structure.