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