National Foods to dispose of $3.7m properties

National Foods to dispose of $3.7m properties
Published: 19 March 2018
NATIONAL Foods Limited will within the next six months dispose of properties valued at $3.7 million that are non-core to the business comprising buildings and land.

Board chair, Mr Todd Moyo, said this in a statement accompanying the group's financial results for the half year ended December 31, 2017.

"These properties will be disposed to a new company in which National Foods Holdings Limited will retain a non-controlling interest through its wholly-owned subsidiary, National Foods Properties Limited. As such the relevant properties have been reclassified as assets held for sale," he said.

The firm spent $1.98 million in capital expenditure in 2017, an amount far below the planned $12 million due to the prevailing foreign currency shortages.

"Capital expenditure for the period amounted to $1.98 million, well behind plan due to difficulties in sourcing foreign currency, which caused delays in implementing various capital projects that had been approved by the board," said Mr Moyo.

In March last year, National Foods indicated plans to deploy about $12 million in capital expenditure during the period with half of the funding going towards the flour business. For the period, the flour milling division volumes increased by 16 percent over the prior year.

"Once again the baker's flour category drove volumes as bread consumption increased in the face of declining availability and increased pricing for alternative starches, notably rice and pasta.

"Profitability for the division was muted, however, declining by 15 percent as cost increases driven by higher international wheat prices could not be fully recovered," said Mr Moyo.

He said despite his organisation being behind in terms of implementing capital expenditure projects, they will continue to reinvest in improving their operations, prioritising the project pipeline in accordance with foreign currency availability.

During the period under review, National Foods revenue was 10.8 percent below the prior year, although a substantial part of this was due to third party products that were traded in the previous financial year.

"Operational expenditure decreased to $23.54 million for the period, an appreciable reduction of 11.7 percent compared to last year, mainly as a result of the discontinuation of the depots.

"The company continued to extend its position on key raw materials, as a consequence of which working capital levels remained high, closing the period at $86.6 million," said Mr Moyo.

"This resulted in increased interest charges, which rose from $0.48 million last year to $1.58 million this year.

"These raw material positions will progressively unwind in the coming half year, with the working capital position expected to further reduce by year end," he said.

On maize milling, Mr Moyo said the division achieved improved results registering a small profit, having suffered a loss of $1.5 million in the same period last year.

"Volumes declined by 17.3 percent, an outcome that was largely expected following the local excellent harvest," he said

Mr Moyo said the stockfeed division performance was disappointing as it declined by 28.4 percent on prior year due to Avian Influenza outbreak, which severely compromised availability of day old chicks.

"Beef and dairy feed were also softer following the excellent local rains, which improved pastures and reduced supplementary feeding requirements," he said.

The moving consumer goods division produced as a strong result for the period, driven by rice and to a lesser extent salt, which maintained its market leading position. The group continues to support local farming with 10 600 hectares of maize, wheat and soya beans having been planted through two substantial contract farming schemes that National Foods is involved with.

"National Foods supported the production of 8 500 ha of maize, wheat and soya beans through the 2017 winter and 2017/18 summer seasons," said Mr Moyo.
- zimpapers
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