Dairibord sees 50% drop in profit

LISTED milk products processor, Dairibord Holdings, saw a near 50% drop in profit after tax to ZWL$6,89 billion after expenses and finance costs more than doubled in the financial year ended December 31, 2023.

In the prior year, the food and beverages concern posted net profit of ZWL$13,59 billion.

During the period under review, selling and distribution, administration and other operating expenses as well as finance costs totalled ZWL$226,2 billion, up from the 2022 comparative of ZWL$104,53 billion.

In a statement attached to Dairibord’s financial results for the year ended December 31, 2023, board chairperson Josphat Sachikonye said they would be focusing on a leaner cost structure for the year.

“The group experienced significant cost increases on account of imported inflation and price distortions arising from exchange rate movements. There were sharp increases in material costs and utilities. Resultantly, cost of sales grew by 41% in inflation adjusted terms,” he said.

“Fuel supply remained stable, while availability of utilities was unreliable and at a high cost. Frequent power outages and inconsistent municipal water supply increased the cost of business operations.”

Revenue rose by nearly 48% to ZWL$724,11 billion during the period under review.

Sachikonye attributed the increase to an 11% rise in sales volumes and strategic pricing adjustments implemented to safeguard against margin erosion.

“The group achieved positive volume growth. Sales volume at 108 million litres marked an 11% increase above the comparative period last year. Liquid milks also grew by 8% compared to prior year, while beverages maintained a consistent growth momentum with an 18% growth,” he said.

“Foods declined by 21%, a result of persistent challenges in the procurement of high-quality inputs, reduced demand for bulk ice cream due to power outages and heightened competition from cheaper imports in the condiments category.”

However, the rapid depreciation of the local currency during the year resulted in foreign exchange losses of ZWL$36,30 billion, compared to the prior year’s comparative of ZWL$3,17 billion. This weighed down the business.

Sachikonye said the group was well-positioned to capitalise on emerging opportunities.

This is because the firm had ZWL$1,25 to every dollar of short-term debt, an uptick from the prior year’s ZWL$1,23.

“In the face of ongoing economic challenges, particularly the market turbulence witnessed in these first months of 2024, our commitment to stringent cost containment measures has escalated.

"The group is aggressively pursuing a lean and agile cost structure, ensuring sustained profitability and long-term value creation for our stakeholders,” Sachikonye said.

“As part of its growth strategy, the company will continue exploring avenues for expansion, both domestically and regionally, while ensuring a sustainable and responsible approach to business operations.”

Total assets stood at ZWL$335,6 billion during the period under review.