Dairiboard employees busy at work
Golden Sibanda Senior Business Reporter
Dairibord Holdings revenue for the interim to June 2014 retreated 11 percent to $43,7 million weighed down by a 6 percent decline in volumes.
Revenues were also negatively impacted by the effect of product Dairibord’s mix and price adjustments made in order to remain competitive in the market.Dairibord is battling to attain profitability since the business started showing signs of sneezing in its performance for the year to December 2012.
Operating loss, although having declined now, remained negative at 627 000 from $3,1 million, translating to a net loss in the 2014 interim period.
Growth appeared firm in the half year of 2012, with profit jumping 39 percent while revenue climbed 14 percent. But the growth in 2012 full year revenue eased to 11 percent while profit surged only 1 percent.
Dairibord is now battling to buck the trend of declining revenue, profit and volumes through a series of cost cutting initiatives that include own milk production, retooling, staff cuts and new products.
While there was some improvement on the bottom line after the loss narrowed to $480 000 from $3,3 million in the 2013 interim, other indicators such as raw milk intake and sales volumes kept falling.
In line with the 11 percent decline in revenue, raw milk intake eased by 4 percent while sales also caught a cold, sliding 6 percent.
Dairibord says its loss would have worsened if it had not cut costs. As such, overheads declined by 8 percent after the cost cutting.
Volumes sold were 6 percent down at 29,985 million litres. Liquid milk volumes recorded 2 percent growth, but foods and beverages declined by 14 percent and 11 percent, respectively.
Dairibord said volumes sold for liquid milks in Zimbabwe were up by 9 percent.
Weak performance in Malawi negatively impacted overall growth of the milk portfolio.
In Zimbabwe, Chimombe 250ml line extension, Chimombe carton tetra, Lacto and Steri milk bolstered performance.
Dairibord said declining disposable incomes negatively impacted sales volumes of products deemed non-basic include foods and beverages.
The group has intensified investment into research and development to increase its share of consumers’ disposable incomes.
To that end, the group launched the Dairibord Pfuko-Udiwo Maheu, a traditional beverage, into the Zimbabwe market with sales volumes projections coming through above initial budget targets.
Investments made during the first half and second half are expected to bring the dairy processor up to date with latest technology to enable introduction of new “exciting” products into the market.
In line with the objective to improve operational efficiency, a total of $4,872 million has been spent on the Maheu plant and filling equipment, aqua-lite plant, bulk yoghurt filing equipment and ice cream plant.
The aqua-lite and filling equipment installed in July this year will increase the group’s capacity to meet market demand for bottled water.
The yoghurts and ice cream plants will also increase the dairy processor’s support line extensions into larger stock keeping units.
Dairibord said it will maintain focus on cost containment and prudent working capital management to remain viable. Initiatives undertaken include the heifer importation programme.
The initiative to ensure self supply of raw milk saw 180 heifers being imported.
Of the 26,8 million litres of milk produced during the interim period to June, Dairibord said its share of that local production was 40 percent.
In Malawi raw milk intake fell by 35 percent due to quality issues. Strategies have been instituted to restore milk intake volumes.