HARARE – National Foods profit for the year retreated significantly on account of high production costs and a disappointing performance in the Maize unit which suffered stiff competition from cheap maize meal imports from South Africa.
The scrapping of the government subsidy scheme compounded matters for National Foods in this segment, and resultantly, overall volumes in the Maize unit declined by 32 %.
But this was not enough to offset gains from positive consumer demand and improving market presence across the Group’s product portfolio which posted a 48 % volume increase across all categories excluding maize.
In its full year results, operating expenditure increased by 327% as costs normalized in real terms with the easing of inflation. Interest costs increased by 564% to ZW$ 389 million as the interest rates on local borrowings increased significantly.
Revenue grew 26 % to $ 33.18 billion from $ 26.43 billion on the back of increased volumes of 15 percent to 525 000 tons.
Subsequently, the Group posted a 15 percent decline in inflation adjusted profit before tax of $ 470 550 from $ 3.037 million.
All of the Group’s categories except maize and pure oil registered volume growth.
Stockfeed volumes improved by 33% driven by growth in the poultry category, where volumes increased by 53% relative to last year despite a 14 % decline Beef feed volumes due to a general reduction in cattle feeding.
Volumes in this Division increased significantly by 74% on the back of competitive pricing.
Snacks and Treats, Cereals and Flour units increased volumes on account of improved market demand
However, the Pure Oil unit encountered challenges due to an increase in international crude oil prices which could not be fully recovered in product pricing
The Group has earmarked capital investment projects that include the purchase of a new state of the art Flour mill, which will be installed as a replacement for the existing mill at the Bulawayo Basch Street site, at an estimated cost of US$ 5 million. The project is now underway and progressing on schedule with commissioning scheduled for late 2022.
Furthermore, the Group has approved the acquisition of additional cereal manufacturing equipment at a cost of US$ 4 million which will allow the Group to expand its repertoire of breakfast cereals and extruded products.
The company, whose financial position remains in a healthy position with very moderate levels of gearing, said its well positioned to continue to fund its pipeline of new projects as its net debt is at a modest ZW$ 591 million as at year end.
Deposits for both the new Bulawayo Flour mill and the new Cereal project in the latter part of the year have been paid.