'No immediate respite to Zim forex shortages'

Published: 16 March 2018

LISTED Dairibord Holdings Limited (DHL) does not see an immediate respite to foreign currency shortages and will remain cautious in its business operations due to uncertainty evoked by upcoming elections.

DHL chief executive officer, Anthony Mandiwanza (pictured) told an analyst briefing on Wednesday that the painful forex shortages were worsing.

"The margin of course will remain under severe pressure mainly because of foreign currency constraints. It's excruciating and it's getting worse and worse. We do not see an immediate respite within a short period of time and so we take note as we move into 2018," he said.

Forex is critical for the operations of the company as it imports at least 32% of its raw materials.

The company's profit after tax grew to $1,3 million in 2017, from a loss of $5,4 million in the prior buoyed mainly by cost containment measures as well as an increase in product demand.

Mandiwanza said line extensions such as maheu flavours, fun'n fresh and Natural Joy juices were well received by the market.

He said potential demand in pfuko, tomato sauce and yoghurts was, however, not fully satisfied due to forex supply challenges.

Volumes increased by 8% to 89 423 litres in 2017 from 82 859 litres in 2016.

Liquid milk contributed 10,4 million litres, foods 12,1 million litres and beverages 46,9 million litres.

Mandiwanza said the company benefitted immensely from the Chipinge plant which was refurbished at a cost of $4 million in 2015 with the capacity to produce 24 million litres of sterilised milk per annum.

Revenue surged by 10% to $103,1 million from $93,4 million in the previous year.

The company said there was a 2% increase in selling price per litre in line with the inflation rate which closed the year at 3,4%.

Dairibord invested $2,4 million in property, plant and equipment in the year and significant investments were done in sachet packing line, refrigeration equipment and water reservoir for the Chitungwiza factory.

On the outlook, Mandiwanza said elections will have a direct impact on the business performance.

"Our view is that we are cautious about 2018 because there are a number of issues which are still up in there. The general elections are another issue. They have a direct impact on how the investors and business alike are going to perform. There are a number of commitments we have made. Our debt settlement all those issues that are still up there in the air. Therefore we will be very cautious," he said.

He, however, was optimistic that demand of products was expected to remain firm in the market, with volumes envisaged to be driven by milk and beverages.

- newsday

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