Innscor posts mixed volume performance

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Zimbabwe Stock Exchange listed conglomerate, Innscor Africa Limited posted mixed volume performance for the half year to December 31, 2019.

Volume performance was mixed across three main segments of mill-bake, protein and other light manufacturing businesses.

The Bakery division under the Mill-Bake segment recorded a 45 percent drop in loaf volumes as flour inadequacy and managed loaf prices resulted in “several disruptions to bread production.”

A policy-shift from a controlled pricing approach to a market-related pricing model, however, resulted in consistent supply of flour and bread and hence normalised prices. This provided opportunities for the rebuilding of the volume base.

National Foods recorded a 32 percent decline in overall volumes to 211 million tonnes compared to the same period in the previous year, largely on the back of subdued consumer spending and the progressive removal of subsidies in the flour division. The maize division was resilient with volumes similar to the previous year.

The maize division was saved by the Government subsidy programme launched in December 2019 to ensure availability of the product.

The division on its part embarked on maize importation programme to complement Government efforts, while Mutare and Masvingo mills were re-opened. Forty five million tonnes of maize were reportedly milled since the launch of the subsidy programme.

Associate company, Profeeds, recorded a 27 percent fall in feed volumes and 33 percent decline in day-old chick volumes compared to previous year, more attributable to subdued consumer spending.

The decline was within the “retail platform, which serves the small-scale market segment.”

Improvement is expected with the retail platform re-branding exercise and the feed product development, which continues to be the core focus area of the business.

The later had seen the new fish feed category having “excellent volume growth.”

Volumes also showed a mixture of growth and decline across divisions in the Protein segment. The segment comprises Colcom, Irvine’s, Associated Meat Packers (AMT), Texas Meats and Texas Chicken branded stores.

The Colcom division posted 17 percent drop in overall sales volumes save for the fresh category which “continued to show good volume growth.”

Pig production grew by 7 percent compared to the previous year with a record 50 000 animals having been processed during the period under review.

Irvine’s recorded a 26 percent volume growth in table eggs, an all-time high for the business. Frozen chicken volumes, however, plummeted by 14 percent behind previous year.

Day old chick volumes also fell by 34 percent as small scale farmers reportedly reduced operations due to diminished crop yields.

Plans are underway to invest further in table egg automation and additional hatchery facilities with long term projects planned to ensure “lowest cost production can be achieved.”

Volumes at AMP Group were up 23 percent in the previous year on the back of continual growth of the retail network, represented during the period under review by the opening of Texas Meat Market outlet in Bulawayo.

The Zimnyama business was expanded in line with the concept and has achieved the export status with wide sales opportunities to regional markets.

Other light manufacturing and services, namely Natpak, Prodairy, Probottlers, and the Group’s non-controlling interests in Probrands and Capri performed relatively well with regard to volumes.

Volumes at Natpak were up 18 percent in the previous year with full utilisation of the corrugated packaging plant and the new rigids packaging operation, which operated close to capacity.

Volumes in the sacks and flexible divisions were marginally down due to subdued demand.

Prodairy volumes rose by 25 percent with sound performances by all categories save for the dairy blend and maheu categories.

Raw milk intake remained solid and accounted for 20 percent of national production. The butter offering, launched during the period in question, was well received by the market, driving the motive to invest in other adjacent products.

Volumes at Probottlers fell by 26 percent compared to prior year due to poor power supply at the unit. Volumes, however, indicate recovery signs with the installation of additional generating capacity within the plant.

Probrands volumes were also down by 14 percent due to depressed rice volumes.

Irrespective of some volumes fall, the group posted sound financials.

Revenue at $4,2 billion was up 16 percent compared $3,6 billion in prior year comparative, attributable to among other things on increased average selling prices following the removal of subsidies on certain products at National Foods.

Being the main revenue contributor, National Foods achieved $2,06 billion in revenue, which was a 30 percent boost compared to the previous year.

Associates delivered a 113 increase in earnings with all units contributing in a positive way.

Profit before tax was up 14 percent to $688, 7 million compared to $605,8 million in prior year. Interim headline earnings per share of 74,60 cents indicated a 52 percent boost compared to the previous period. Further, the group managed to maintain a strong balance sheet. – Herald