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DAIRIBORD Holdings Limited achieved a record first half (H1) sales volume performance in five years after overall volumes for the six months to June 30, 2021 jumped 54,5 percent ahead of same period last year.

The growth was supported by strong demand across all product categories. According to the food and dairy processor, first quarter volumes went up 18 percent compared to same period in the prior year, while second volumes more than doubled to record a 112 percent increase ahead of same quarter in 2020.

During the first quarter, the country was in a level four lockdown, which had an adverse impact on businesses across sectors, although Dairibord was classified an essential service provider and therefore allowed to operate.

For Dairibord, the level four lockdown, which was lifted on February 28, negatively affected supply chains, market access and demand for products.

During the period under review, liquid milks, foods and beverages volumes increased by 22 percent 52 percent and 87 percent respectively compared to same period last year.

Despite the growth, group chairman Josphat Sachikonye, admitted that demand still exceeds supply across the product portfolio, particularly in the liquid milks category that is constrained by raw milk supply challenges.

During the six-month period, raw milk utilised during the period was 1 percent above prior year, while national milk production was 2 percent below same period in 2020.

“Despite the good rains, stock feed prices continued to rise. This again negatively impacted milk supply growth. The group remains committed to supporting local farmers to grow milk supply through actively promoting lower cost operating models in a bid to bring prices back to regional parity in the medium term.

“The long term benefits of increased raw milk production will reduce the dependence on imported milk powders and the associated foreign currency requirement,” said Sachikonye in a statement accompanying the group’s financials for the period under review.

On financial performance, revenue rose 65 percent to $4,2 billion driven by a strong sales volume performance together with moderate price adjustments to minimise margin compression.

Sachikonye highlighted that the focus on generation of foreign currency revenues continued, resulting in a 141 percent increase over the same period in prior year. Foreign currency revenues accounted for 15 percent of total revenue up from 9 percent in the prior year and contributed significantly towards meeting the import bill.

Production efficiencies and cost containment resulted in overheads growing by a lower rate of 53 percent as compared to revenue growth.

Net finance charges were high at $147 million representing a 353 percent growth over prior period on account of increased borrowings and costs. The borrowings were invested in supporting sales volume growth through purchase of raw and packaging materials and funding long working capital cycles, resulting from protracted global supply lead times and delays in disbursements from the foreign currency auction market.

During the half year period under review, the business narrowed loss for the period to $180 million while basic loss per share came in at 50,33 cents. Total assets remained flat at $3,6 billion.

The group expects the second half of the year to sustain growth based on among others the improved availability of agro based raw materials on the back of a good agricultural season, continuous development of strategic milk supply collaborations such as the Tavistock Estates and Palmline/ Zimplats dairy projects to ramp up raw milk intake as well as implementation of in-progress capital expenditure investments and line extensions that will come online in H2 and boost product availability.

Dairibord did not declare a dividend.