CFI to prioritise milling, low-cost housing investments

LISTED agro-concern CFI Holdings says it will continue to prioritise continued investments in its milling operations in the short term to underpin the group’s long-term competitiveness.

Group chairperson, Ms Itai Pasi, said in a statement of financials for the year ended September 30, 2023, that the long-term focus remained on the development of low-cost housing delivery in Harare South in support of the Government’s Vision 2030 development goals.

“The group will therefore maintain its efforts to resolve all issues affecting its interests in its land banks to make way for progressive, orderly infrastructure development and service delivery to the various settlements,” she said.

For the year under review, the group’s inflation-adjusted revenue increased by 245,7 percent to $201,99 billion from $58,43 billion in the previous year, reflecting the mismatch between the rapid inflation of the Zimbabwe dollar during the year as compared to the subdued official inflation statistics.

Overall, retail operations contributed 76,3 percent, milling operations 20,1 percent while farming operations accounted for 3,4 percent of group turnover.

“Expenses increased in real terms as a consequence of these expenses being pegged by suppliers and service providers in USD but converted to local currency at prevailing parallel market exchange rates.

“On the other hand, selling prices were determined in line with official exchange rates, which consistently lagged behind market rates,” said Ms Pasi.

She added that the group incurred unrealised exchange losses of $139,5 billion on its foreign currency-denominated loans and creditors.

“Consequently, the group posted a loss before tax of $125,23 billion against a loss before tax of $3,06 billion from the prior year.”

Ms Pasi said CFI invested $2,29 billion into property, plant, and equipment, mostly company motor vehicles and capitalised Victoria Foods — plant spares as well as centre-pivot irrigation equipment at Glenara Estates.

In terms of operations review, the Farm & City Centre (FCC) division struggled under the weight of a difficult operating environment characterised by unstable multiple exchange rates, high-interest rates, and reduced consumer spending.

As a result, overall sales volumes for the entity’s key volume drivers fell by 15 percent from the prior year.

Ms Pasi said that following the announcement of the 2023–2024 drought caused by the El Nino weather phenomenon, sales of key agricultural volume drivers such as fertilisers and chemicals were forecast to remain depressed.

At Glenara Estates, 550 hectares of white maize and 236 hectares of soyabeans were established during the period.

Ms Pasi said table potato prices realised per kg declined by 8 percent relative to the prior year due to a flood of supply to the potato market and a reduction in consumer buying power.

“The estate’s cattle breeding and pen-fattening operations were maintained with reasonable success,” she said.

On the property development of Saturday Retreat, Ms Pasi said in February 2023, the Supreme Court ruled in favour of Crest Breeders International, confirming the entity’s rights in Saturday Retreat Estate.

She said the entity is seized with implementing its development strategy as the group looks to enhance its synergies with the retail unit and diversify its portfolio.

At Langford Estates, the legal proceedings remain pending before the relevant tribunals, and Ms Pasi said the market will be updated on further progress in due course.

Under the milling operations, Agrifoods sales volumes increased by 31 percent from the prior year on the back of improved raw material availability on the local market from a good 2022–2023 agricultural harvest.

Ms Pasi said Agrifoods continues to reassert its presence in the market, and efforts to improve demand for its products are ongoing as the entity claws back its market share.

At Victoria Foods, volumes declined by 14 percent, weighed down mainly by intermittent power cuts affecting production.

“Additionally, the maize mill was seriously affected by raw material supply challenges during the period, and apart from the shortages, raw material prices also rose from the prior year’s level, ultimately depressing the division’s financial performance,” added Ms Pasi.

In the poultry division, Crest Poultry Group’s other units, Crest Breeders, Hubbard Zimbabwe, and Suncrest Chickens, remained under care and maintenance during the period, while joint ventures leveraging the group’s poultry infrastructure and brands are still being pursued.

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