Innscor units bask in $30m profit Na­tional Foods vol­umes up 13% Col­com rev­enue clocks $59m

Chronicle (Zimbabwe) - - Business Chronicle - Pros­per Ndlovu Busi­ness Ed­i­tor

DI­VER­SI­FIED con­glom­er­ate Innscor Africa Limited’s rev­enue grew six per­cent in the full year ended June 30, 2016 to $586.9 mil­lion from $554.2 mil­lion in the prior year spurred by im­proved ef­fi­cien­cies and an in­crease in vol­umes across its di­vi­sions.

The group’s fi­nan­cial re­sults for the pe­riod in­di­cate the listed con­cern main­tained sta­ble op­er­a­tions de­spite neg­a­tive eco­nomic con­di­tions char­ac­terised by weak con­sumer de­mand and low dis­pos­able in­comes.

“On a con­tin­u­ing op­er­a­tions ba­sis the group’s rev­enue grew by six per­cent against prior year. Im­proved ef­fi­cien­cies at both the mar­gin and op­er­at­ing profit lev­els re­sulted in op­er­at­ing profit in­creas­ing by 26 per­cent and profit be­fore tax in­creas­ing by 25 per­cent ($39 mil­lion) over the same pe­riod,” chair­man Mr Ad­ding­ton Chi­nake said.

“A more bal­anced con­tri­bu­tion by each busi­ness as com­pared to the prior year was the main rea­son for the group’s head­line earn­ings per share in­creas­ing by 107 per­cent from 1.64 US cents to 3.40 US cents. This was a very pleas­ing re­sult and man­age­ment is to be com­mended.”

Na­tional Foods de­liv­ered a strong set of re­sults dur­ing the pe­riod at 13 per­cent growth in to­tal vol­umes to 560 000 tonnes and a 5.2 per­cent rise in rev­enue to $330 mil­lion with high per­for­mance at the flour and maize di­vi­sions. The busi­ness also com­pleted the ac­qui­si­tion of a 40 per­cent non-con­trol­ling stake in Pure Oils, which pro­duces cook­ing oil and as well as pro­tein oil cakes used in pro­duc­tion of an­i­mal feed.

Sim­i­larly Col­com recorded a 14 per­cent growth in pork vol­umes buoyed by an ex­cel­lent per­for­mance at Trip­ple C and an in­crease in pig sup­ply by aux­il­iary pig­geries that have been brought on line in the past 18 months. Its rev­enue clocked $59 mil­lion.

Nam­pak also had a suc­cess­ful year with the new flex­i­ble pack­ag­ing line con­tribut­ing to a 57 per­cent growth in vol­umes and 46 per­cent in rev­enue over the prior pe­riod. The unit’s op­er­at­ing profit in­creased by 235 per­cent over the pe­riod off a low base.

An­other sub­sidiary, Pro­feeds, recorded a 10 per­cent growth in feed vol­umes al­though lower sell­ing prices weighed down on rev­enue.

Dur­ing the pe­riod the group also ac­quired a non­con­trol­ling share at Pro­brands, which is in­volved in pack­ag­ing and man­u­fac­ture of a num­ber of gro­cery prod­ucts and bev­er­ages. The Bakery busi­ness sold 141,7 mil­lion loaves dur­ing the year a 30 per­cent in­crease on prior year while Earn­ings Be­fore In­come Tax De­pre­ci­a­tion (EBITDA) was up two per­cent to $67 mil­lion.

The group has since de­clared a div­i­dend of 0.60 US cents per share payable to reg­is­tered share­hold­ers be­fore end of this month.

In 2014, Innscor be­came the first Zim­bab­wean com­pany to breach the $1 bil­lion turnover mark. The com­pany’s per­for­mance has some­what ta­pered down since re­struc­tur­ing the con­glom­er­ate and fo­cus on light man­u­fac­tur­ing.

In ad­di­tion the group dis­posed off its in­ter­ests in the Spar re­tail stores and Shearwater, closed the Spar distri­bu­tion cen­tre and en­tered into ne­go­ti­a­tions to dis­pose of its in­ter­ests in Spar Zam­bia and the River Club.

“Once we have con­cluded the dis­posal of the Zam­bian op­er­a­tions we are essen­tially Zim­bab­wean cen­tric. We do need to look abroad but be­fore we do that we have a lot of work to do in Zim­babwe,” chief ex­ec­u­tive of­fi­cer Mr Ju­lian Schonken has said.

“We have seen too many in­stances of good Zim­bab­wean op­er­a­tions our­selves in­cluded go­ing into the re­gion and re­ally bat­tling be­cause ed­u­ca­tional lev­els are com­pletely dif­fer­ent, the in­fra­struc­ture is not what we are used to, there is bu­reau­cracy. So we are go­ing to be care­ful about the way we do busi­ness be­fore we go to other geogra­phies.”

Look­ing ahead, Mr Schonken said, the group would have to ad­dress a bal­loon­ing cost base.

“We still have a long way to go in get­ting our costs down to re­ally where they should be. We want to be able to com­pete in an open econ­omy and we know that our cost base is too high. We need to mi­grate our costs from a fixed com­po­nent and get our struc­tures ab­so­lutely as lean as pos­si­ble,” said Schonken.

Mr Chi­nake said the group has com­pleted the strate­gic re­con­fig­u­ra­tion pro­gramme em­barked on in the pre­vi­ous fi­nan­cial year, which helped mit­i­gate the en­vi­ron­men­tal com­plex­i­ties and has sig­nif­i­cantly sim­pli­fied the group and cre­ated a foun­da­tion on which it can build a sub­stan­tial light man­u­fac­tur­ing busi­ness into the fu­ture.

He said the pro­gramme man­i­fested in the ac­qui­si­tion of Transerve to scale up the re­tail and distri­bu­tion seg­ment, the ac­qui­si­tion of a non-con­trol­ling stake in Pro­feeds and the un­bundling through a div­i­dend in specie and ul­ti­mately list­ing of both Sim­bisa Brands Limited, the quick ser­vice restau­rant busi­ness and Axia Cor­po­ra­tion Limited, the spe­cial­ity re­tail and distri­bu­tion busi­ness com­pris­ing of Distri­bu­tion Group Africa, Transerve and TV Sales and Home in the later part of the year un­der re­view.

Na­tional Foods in Bu­l­awayo

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