Food and dairy products processor, Dairibord Holdings Limited’s profit for the year ended December 31, 2019 jumped 328 percent to $142 million compared to $36 million recorded in the previous year.
The group achieved an operating profit of $90 million compared to $55 million in the comparable year 2018. An operating profit margin of 8,1 percent was attained up from 7,9 percent in prior year.
Group chairman, Josphat Sachikonye, attributed the improved performance to reduced fixed overheads, diligent procurement practices, and an intensified drive to improve operational efficiencies.
Foreign liabilities reduced from US$3,9 million in 2018 to US$0,93 million in 2019, a 76 percent drop as the company focused on managing and reducing foreign denominated debts.
Basic earnings per share jumped 327 percent to 39,59 cents from 9,27 cents recorded in the previous year.
Revenue came in at $1,115 billion, which represented a 60 percent growth on prior year figures due to growth in exports and necessary product price adjustments.
For the year under review, export revenue doubled to US$3,4 million compared to prior year’s US$ 1,7 million as the company continued to drive exports in order to increase its regional foot print and to generate foreign currency to cover import requirements.
Raw milk intake grew by 10 percent compared to national milk growth of 7,2 percent benefiting from milk supply development initiatives targeted at small, medium and large-scale milk producers.
However, sales volumes went down 17 percent against an industry average decline of 23 percent for the manufacturing sector. During the period under review, the market battled drop in disposable incomes due to inflationary pressures. The liquid milk category achieved a marginal growth of 0,2 percent, due to an increase in local raw milk intake.
According to Dairibord, the beverages category fell by 23 percent, while the food category which accounts for 9 percent of the sales was also on the downside with a 39 percent decline.
Meanwhile, disposal of Dairibord Malawi was finalised in the third quarter of 2019. At the time of the disposal, the liabilities of the subsidiary exceeded assets.
The food and dairy processor resolved to dispose of the regional perennial loss making unit, which had become the group’s problem child impacting negatively on overall group’s performance.
Going forward, the outbreak of the Covid-19 pandemic will have a knock on effect on the business and the economy as a whole, with its negative effects already being felt across the globe.
Despite the effects posed by the pandemic and the challenges that exist in the economy prior the outbreak, Mr Sachikonye indicated the business will maintain its focus on revenue enhancement initiatives, support raw milk production, cost containment and increased production efficiencies.
Fixed costs such as stockfeeds, cleaning chemicals and labour remain the same against depressed revenue. – Herald