DAIRIBORD Holdings Limited says despite the turbulent operating environment experienced in 2022, the group recorded volume growth compared to the prior year underpinned by diversification thrust and implementing affordable pricing models
The firm said extended lead times throughout supply chains, delays in payment from the foreign currency auction system and increased labour costs exerted pressure on costs and margins.
Added to that, an inconsistent supply of quality water and power impeded and increased manufacturing costs.
However, through prudent business management that entailed implementing affordable pricing models and consistent review of the route to-market strategies it weathered the challenges.
“Notwithstanding the turbulent operating environment, the Group recorded positive volume growth compared to prior year.
“This success was made possible by maintaining focus on diversifying and expanding product portfolios, implementing affordable pricing models and consistent review of the route to-market strategies.
“All these efforts were further aided by ongoing investments in increased manufacturing capacity and capabilities,” group chairman Mr Josphat Sachikonye said in the 2022 annual report.
He said operating profit grew 154 percent to $6.31 billion compared to $2,37 billion reported in the prior year.
At $1,6 billion, net finance charges for the period were lower than last year in inflation adjusted terms, although in historical terms finance charges were higher in the current year as compared to the prior year, driven by an increase in borrowings and higher interest rates which were experienced in the second half of the year.
Borrowings amounting to $1,8 billion were invested in capital expenditure projects to increase production and to fund long working capital cycles.
After accounting for finance charges, the Group posted a profit before tax of $4,3 billion, said Mr Sachikonye.
In the period under review, raw milk utilised was 28,5 million litres, four percent above 2021 and representing 34 percent of the total intake by processors as we remained the leading milk processor.
Mr Sachikonye said the business aims to continuously grow high quality volumes of raw milk through its Milk Supply Development Unit (MSDU) by providing support to the farmers in critical areas which include feed formulation and nutrition, veterinary support, herd growth projects, input procurement facilities as well as sustainability and alternative energy options. Sales volumes for the period grew three percent ahead of the same period last year, with beverages and foods categories delivering growth of seven percent and 10 percent respectively and liquid milks declining by seven percent.
Mr Sachikonye said management will continue to engage in strategic partnerships and explore initiatives for alternative energy models and efficient production methods.
“Volume growth in 2023 will be underpinned by recently completed capital investment projects which include a third maheu (Pfuko) line, a drinking yoghurt (Yoggie) line and a third blow moulder for Steri milk bottles.
“In addition, a new chilled water plant was installed at the Harare Rekayi Tangwena factory to optimise production capabilities.”
He added that the group will continue to seek value-adding opportunities.
“We will leverage initiatives in raw milk production growth, our diversified product portfolio, effective pricing models and route- to-market strategies for sustained growth. “Cost containment and cost reduction through improved productivity and efficiencies are also key focus areas to improve profitability.”