The Zimbabwe Independent

Lockdown slows Padenga sales

- Melody Chikono

THE Covid-19-induced national lockdown has affected Padenga Holdings’ skin sales in Zimbabwe with revenue expected to fall to US$24,73million in FY20, from US$25,53 million.

Government imposed a national lockdown on March 30 this year to curb the spread of the novel coronaviru­s pandemic which has claimed more than 300 lives in the country.

IH securities in its analysis of Padenga Holdings FY2020 results, anticipate­d a marginally higher average price per skin for FY20 for the crocodile business given the new harvesting strategy implemente­d in Q120.

“Despite higher selling prices, we anticipate the Zimbabwean operations will contribute US$24,73 million to the total revenue in FY20, flat from US$25,53 million because of a decrease in volume of skin sales following lockdown restrictio­ns,” IH noted.

In the US market, 75% of skins produced annually are for the watchband skin market. Watchband skins are oversuppli­ed in the market and prices have dropped off. Only farms with access to eggs/hatchlings at low prices are viable at these prices. Depressed demand for alligator skins is likely to impact prices.”

Profitabil­ity is also projected to be compromise­d in FY20 as the operation cleared out the last of its stock impacted by double scale.

“The alligator business is expected to produce 6% more skins in FY20, from 17 176 in FY19 to 18 149 leading to a forecasted revenue contributi­on of US$3,01 million, down from US$3,59 million,” IH said.

Post the reporting date, lifting of travel restrictio­ns in October allowed for 18 629 crocodile skins to be graded and invoiced, while the high-end leather goods market made a strong recovery in sales across Asia, as lockdown restrictio­ns eased in that area.

The company is on a diversific­ation drive, spurred by an ongoing shift in the industry towards curbing the use of exotic skins by increasing the standards for environmen­tally sustainabl­e husbandry practices. The drive commenced with the business purchasing a 51% stake in mining group Dallaglio at the end of 2019.

Padenga is also carrying out a feasibilit­y study into plantation cropping of avocados and macadamia nuts.

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