NATIONAL Foods Holdings Limited has registered a 29 percent compounded annual growth in underlying profit before tax over the last five years due, it believes, to the strength of its strategies and a firm brand equity.
The group posted a good financial performance for the year, albeit partly assisted by some non-recurring items. Profitability stood at $18,4 million this year having grown incrementally from $1,4 million in 2010, $7 million in 2011 and $11 million last year.
While 2013 profits were boosted by non-recurring items, the fast moving consumer goods producer reckons profitability, at 61 percent growth over 2012, has remained firm over the last five years.
"The five-year underlying profit before tax compounded annual growth rate stands at 29 percent bearing testimony to the good strategies adopted over the years," said chairman Toddy Moyo.
Likewise, revenue has also been trending up exponentially from $160 million in 2010 to $201 million in 2011, $234 million in 2012 and $296 million in the 2013 financial year.
He said the brands of the Zimbabwe Stock Exchange- listed firm have grown market share, a development which has driven up volumes and capacity use at the company's factories.
As a result of the growth in volumes better efficiencies have been achieved off a predominantly fixed cost operating platform, the group said in its annual report for the 2013 financial year.
But Natfoods noted the current environment is showing signs of a slowdown on the back of a liquidity crisis and insufficient local agricultural production. Moreover, further devaluation of the South African rand could negatively impact on Zimbabwe's food manufacturing sector.
Natfoods said the continuation of growth at the recent levels will be largely dependent on a revival of the local agricultural sector and the macro-economic policies to be adopted by the Government.
Management has pledged to continue to develop all aspects of the business to bolster our ability to compete and offer a compelling brand proposition. The increase in volumes sold in the year necessitates further upgrades into plant and equipment and investment in human resources.
"To this end, the group we will spend about $7 million on capital expenditure in the forthcoming financial year. By its very nature, the group has a large fixed overhead with associated risks in the event of a downturn in volumes sold in the wake of the economic slowdown.
"Conversely, the group is well positioned for growth into new categories and through the existing facilities that have significant available capacity. Organic growth will be driven by the economic policies adopted by the new Government in September," Mr Moyo said.
The group is reviewing the business cases for entry into two new categories that can be easily "clipped on" to the existing manufacturing and distribution footprint. At least one new product will be in the market in the forthcoming financial year as consumers justifiably demand more.
The group said it will work to gain meaningful "insights into consumer needs" to drive the innovation in terms of products and brands to meet the needs of the consumer. Particular focus will be put on the pack sizes and price points to mitigate the absence of coins as change.
- herald
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