Dairibord Sales Drop, Earnings Hold Up

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Despite a 12.5 percent slid in sales volumes, Dairibord Holdings Limited still managed a 5 percent increase in revenue to ZWL$ 5.3 billion for the year ended December 2020 against previous year thanks to improved foreign currency sales.

The reintroduction of foreign currency transaction in April last year through Statutory Instrument 85 of 2020 gave impetus to business in the wake of a rapid devaluation of the local currency at the time.

Liquid milks sales declined by 9 percent, largely due to the 6 percent decline in raw milk intake and supply constraints in the importation of supplementary milk powders.

In the beverages category, sales volumes dipped 18 percent while the food category with the highest margins increased 9 percent as compared to 2019.

“The performance (drop in sales) was particularly affected by a lackluster outturn in the second quarter in which volumes dropped by 46 percent year-on-year, due to COVID-19 restrictions that impacted trading hours and sales channels,” said Dairibord chairman, Josphat Sachikonye.

Profit for the year narrowed to ZWL$ 231 million compared to ZWL$ 407 million in 2019.

However, a significant growth in domestic foreign currency sales following the S.I 85 of 2020 was a welcome reprieve despite.

This was despite a 6 percent reduction in export revenue due to border lockdown restrictions.

“Total foreign currency revenue increased by 123 percent over 2019 and accounted for 13 percent of the total inflation adjusted revenue,” said Sachikonye.

Operating costs grew faster than revenue increasing by 10 percent compared to 2019 and resultantly, an operating profit margin of 4 percent was attained down form8 percent prior year.

“The increase in operating cost was driven by exchange rate movements, notably, costs of utilities, fuel, repairs and maintenance,” added Sachikonye.

The company declared a final dividend of ZWL$ 0.23 per share for the period.

The company is still in negotiations for a merger and acquisition of Dendairy (PVT) Limited.