Dr Leonard Tsumba

Business Reporter
DAIRIBOARD Holdings says it is pursuing a number of initiatives to increase output and consolidate profitability riding on positive gains achieved in 2017.

In full year financial results for the period ended December 31, 2017, Dairibord Holdings chairman Dr Leonard Tsumba said increased competition for raw milk and constrained levels of productivity at farm level had a negative impact on its milk intake.

“The group is pursuing various initiatives to increase milk intake, which is currently below market demand. Specific strategies include up-scaling productivity for the existing herd, attracting more farmers, and growing the herd through the heifer procurement scheme,” he said.

Dr Tsumba said their heifer programme, which started in 2012, was now contributing 15 percent of raw milk intake in Zimbabwe.

“Volumes sold at 89 423 million litres were eight percent above 2016 levels. Firm market demand across all product categories, and increased capacity to support beverages and liquid milks benefited volumes. “Volumes achieved were, however, not optimal due to forex driven product shortages, adverse weather conditions in the first quarter of the year, and sales disruptions during system migration on consolidation of the operations,” he said.

The group’s revenue increased 10 percent to $103. 147 million on account of the eight percent volume growth and a two percent nominal price adjustment effected to mitigate cost increases. The average selling price per litre for 2017 was three cents higher than the $1.15 the previous year. Dr Tsumba said going forward the business would continue to drive revenue through volume growth initiatives.

“Profitability significantly improved in 2017, spurred by execution of the turnaround strategy embarked on at the beginning of the year. The group recorded an operating profit of $4.058 million, a turnaround from an operating loss of $3.898 million in 2016,” he said.

After accounting for once off retrenchment costs of $0.847 million and a net interest bill of $0.740 million, the group recorded a profit before tax of $2.471 million compared to a 2016 loss before tax of $4.881 million.

As at December 31, 2017, cash and cash equivalents amounted to $5.819 million from $4.467 million the previous year, mainly due to failure to remit foreign payments. On the outlook, Dr Tsumba said noting the renewed optimism for economic turnaround, Dairibord would focus on improving profitability through volume growth and cost containment, optimally utilising product supply, and contributing towards forex generation through exports into the region.