LISTED milk processor Dairibord Holdings Limited (DHL) is pulling out of Malawi to cut losses incurred by the unit.
Dairibord Malawi (DM) has for a long time been facing viability problems due to foreign currency shortages coupled with other challenges.
“The holding company could not leverage its balance sheet to capacitate Dairibord Malawi and as a result the company continued to experience difficulties…” said DHL’s chief executive Anthony Mandiwanza.
“In our decision we looked at various options… to attract potential investors who may want to inject equity so that we can invest and turn around the business that was not successful,” he added.
DHL was also unsuccessful in securing credit facilities from banks to capacitate DM owing to failure to provide security for the loans.
“Malawi is now regarded as a discontinued operation, the assets are available for sale and for the year ended 31 December, business posted a loss of $693 000 which was actually an increase from the $594 000 it incurred in 2017”, added DHL company secretary Mercy Ndoro.
These challenges among others, according Mandiwanza, resulted in DM being accounted for as held for sale “following our decision to divest out of Malawi.
“That decision has been taken, we are in the process of implementing and executing the exit from Malawi.”
DHL will, however maintain its market share through exports from Zimbabwe to retailers in Malawi, says Mandiwanza.
This comes after Zimbabwe Limited (DZL) recorded 28 percent increase in total revenue to $126.4 million in year ended 2018.
Export growth surged modestly to 67 percent accompanied by operating profit 119 percent to $10 million.
In the year ended 2019 DZL says it is estimating a revenue growth of 40-50 percent, a six percent volume and an operating margin of nine percent.