Innscor keeps focus on US$70m projects

HARARE – Innscor Africa says it continues to roll out its US$70 million expansion programme with new investments spanning the beverages, milling, baking, protein, and packaging segments, which are scheduled for completion in the next financial year.

Last year, the group approved the US$70 million investment to expand operations and build a new flour milling plant in Bulawayo, which it expects to commission this year.

The diversified conglomerate, in its interim financials for the period to December 31 2021, said it remained extremely positive about the potential growth trajectory of the local economy and hopeful that progressive and consistent policy will be employed to underpin this growth and ensure that a full and sustainable recovery can be achieved.

“These investments will result in capacity increases on existing categories, improvement in manufacturing operating efficiencies through the utilisation of new technologies, and, most importantly, will enable growth into new and adjacent products and categories,” Mr Addington Chinake, the group’s chairman, said in a statement of the financials.

During the period under review, group revenue increased 112 percent to $53,7 billion on the comparative period on the back of strong volume performance, enabled by competitive pricing and supported by ongoing investments into increased capacity and improved production efficiency.

“As anticipated, gross margin growth converged with revenue growth, a consequence of the lower inflation levels experienced during the period under review,” Mr Chinake said.

He added that operating expenditure as a percentage of revenue remained reasonably consistent with the comparative period, notwithstanding the cost corrections experienced across much of the overhead profile of the business. Mr Chinake noted that associate companies continued to contribute positively to the overall group result, with equity accounted earnings 46 percent up on the comparative period.

Net interest for the period under review came in at $1,3 billion on account of higher ZW$-denominated loan levels supporting expansion capital expenditure, combined with higher interest rates.

In terms of segmental performance, in the Bakery Division, loaf volumes closed 23 percent ahead of the comparative period, underpinned by firm market demand, which was encouraging.

Mr Chinake said bread pricing remained a critical aspect of the business to manage, and the company continued to work with the authorities to ensure a balance is maintained between manufacturing viability and relevant pricing for the consumer.

“As previously reported, the group has undertaken to develop a new state of the art bakery in Bulawayo with a build-out over the next twelve months, coupled with further plant automation initiatives within the Harare operations.

“In addition, the operation’s logistics arm has commenced with a re-fleeting programme which will result in improved distribution efficiencies and effectiveness,” he said.

At National Foods, volume performance improved as new categories were introduced into the portfolio, coupled with more efficient operating structures and increased capacity utilisation.

Mr Chinake said despite inflationary pressures contributing to slower consumer demand in the latter part of the period, overall volumes closed 15 percent ahead of the comparative period.

“The Flour Milling division recorded a three percent volume improvement over the comparative period. The new mill installation in Bulawayo will commence in April, and remains on track for commissioning towards the end of 2022,” he said.

The Maize Milling division’s volumes were seven percent behind the comparative period as maize meal demand remained subdued.

At Profeeds, the stockfeed category recorded volume growth of 15 percent ahead of the comparative period, with an encouraging increase of 62 percent within the relatively new “Aquafeeds” fish feed category. Recovery of the small scale poultry market continues to positively impact both poultry stockfeed and day-old chick demand.

The Colcom division, comprising Triple C Pigs and Colcom Foods, delivered 11 percent growth in volumes against the comparative period, with performance in the processed pork category being especially strong, with volumes 27 percent up, whilst volumes of fresh pork remained in line with the comparative period.

The pie category showed an encouraging recovery with a volume growth of 37 percent. Mr Chinake said pig production of 61 000 animals for the period reached record levels, driven by continuing investment into new capacity, combined with ongoing genetic improvement in the herd.

He said further investment will continue in this part of the operation in order to support increased raw material demand in the factory operations.

He noted that Irvine’s continued to deliver encouraging volume growth across its value-chain, underpinned by a recovery in small-scale poultry production and sustained consumer demand across the protein market.

“The day-old chick market remains firm, and this translated into volume growth of 37 percent over the comparative period, while the frozen chicken category delivered 10 percent volume growth over the same period, volumes in the table egg category were similar,” Mr Chinake said.

The AMP Group’s protein range delivered volume growth of 11 percent ahead of the comparative period, with growth recorded across all categories. At Natpak, overall packaging volumes improved by 14 percent over the comparative period and the rigids category delivered 68 percent volume growth over the comparative period, as capacity expansion initiatives undertaken in this category became fully operational. – Herald