Innscor records solid profit, revenue out-turn

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HARARE – Industrial giant — Innscor Africa Limited had a solid performance during the year to June 30, 2022 with revenue jumping 49 percent to $290,78 billion compared to the same prior year period, as firm demand saw significant volume growth.

According to the group, growth was underpinned by strong sales volumes across all core categories as the group’s business units achieved improved capacity utilisation, introduced new products, and expanded product offerings across existing categories.

Group chairman, Addington Chinake said optimal pricing strategies and growing demand from the informal market also drove the solid performance.

“Th­e group’s improved sales volumes and product mix, coupled with a well-priced strategic raw material investment and enhanced production and overhead efficiencies, combined to deliver an operating profit of $87,83 billion for the year under review, representing a growth of 251 percent over the comparative year,” he said.

Net interest charge for the year of $7,579 billion was 75 percent above that of the comparative year, and representative of elevated interest rates and higher local currency-denominated loan values.

After accounting for a monetary loss of $23,23 billion, consolidated profit before tax for the year of $70,27 billion was recorded, which represented a growth of 250 percent against the comparative year.

Profit for the year grew 350 percent to $53,6 billion while basic earnings per share rose 421 percent to $68,35.

The group’s statement of financial position remained robust, with a strong asset base supported by fixed assets and inventory positions and minimal net gearing at year-end. ­The group’s free cash generation was good, following strong operational cash flows during the latter part of the year to support the ongoing expansion capital expenditure programme.

Despite the strong performance, the group was not immune to the headwinds that affected both global and domestic economies and businesses across sectors.

“­The uncertainty felt across international commodity markets, a consequence of the ongoing conflict in Eastern Europe, also negatively affected local business sentiment, with supply-side disruptions giving rise to imported inflation across many commodity classes

“As previously reported, the erratic rainfall patterns experienced during the 2021 summer agricultural season impacted negatively on local production levels of key commodities such as maize and soya.

“Shortfalls in local production of these key raw materials will need to be made up with imported products in the financial year ahead, the group has implemented appropriate strategies to manage both logistics and product input costs in this regard,” said Mr Chinake.

At National Foods, volumes grew by 13 percent on an overall basis over the comparative year, driven by solid performances in the stockfeeds, down-packed, traded goods, snacks and biscuit divisions.

For the bakery division, annual loaf volumes grew 19 percent over the comparative year on the back of improved loaf quality, and a renewed focus on the sales and distribution functions.

Th­e operation was re-structured in the final quarter of the financial year into its core components of manufacturing, sales, and distribution, and the group is confident that this will further improve loaf quality, enhance production efficiencies, and allow for significantly improved market reach.

Irvine’s recorded volume growth across all three core categories with the table egg category achieving a 6 percent growth over the comparative year.

Frozen poultry demand remained firm, and volumes increased 17 percent versus the comparative year while demand across the day-old chick market also improved with volumes closing the year 25 percent ahead of the comparative year.

According to the group, the medium-term facilities upgrade programme, which covers all three core products continues, and will enable further capacity increases in the coming year, whilst the related equipment technology upgrades will continue to drive the individual operations to achieve the lowest cost of production.

At AMP, sustained protein demand combined with further expansion of the product portfolio and improved market reach drove overall volume growth of 16 percent over the comparative year.

The Colcom Division, comprising Triple C and Colcom Foods recorded an 11 percent growth in volumes over the comparative year, driven by strong performances in all core fresh and processed product categories.

The other light manufacturing and services comprising Natpak, Prodairy and Probottlers achieved volume growth for the year of 19 percent, 31 percent and 23 percent respectively while Probrands overall volumes were marginally behind the prior year.

Although the economic environment remains uncertain in the short term, management at Innscor remains upbeat of maintaining its growth trajectory going forward.

Said Mr Chinake: “Th­e prevailing economic conditions remain complex and challenging; however, the group retains its positive outlook as regards macro growth prospects and a medium-term recovery for the economy.

“Our management teams will continue to adapt and optimise business trading models, with focus being directed to balancing pricing and volume objectives, achieving appropriate levels of margin return, ensuring that overheads are contained, creating bespoke working capital solutions relevant to current market conditions, and, most importantly, ensuring maximum free cash generation.”