Agro-industrial concern National Foods says various raw material crops grown under its contract farming scheme now constitute a significant portion of the group’s input requirements.
Todd Moyo, the group’s chairman in a statement of financials for the period to December 31 2021 said the group continued to keenly support contract farming of maize, soya beans, wheat, sugar beans, sorghum and popcorn.
“During the current summer season around 11,000 hectares have been planted, representing a 22 percent increase compared to last year.
“In addition to this, 27,000 tons of wheat was delivered on last winter’s cropping program. The various products grown under this program now constitute a significant portion of the Group’s raw material requirements,” he said.
From a National Foods perspective, Mr Moyo said the improved 2020- 21 summer and winter harvests meant significantly reduced imports of raw materials.
He said the group can now operate much more sustainably than in the past, when it has faced significant challenges in accessing sufficient foreign currency to fund imports.
“Overall, notwithstanding the recent challenges, the group remains positive on the overall trajectory of the economy and as a consequence is working on a number of additional investments in addition to those which are currently being implemented,” Mr Moyo said.
He said the first phase of the cereal investment has seen the introduction of a variety of products over the past year including “Pearlenta Nutri-Active” instant maize porridge, “Better Buy Soya Delights”, and more recently a “Smart Carbs” range of instant breakfast cereals.
He noted that the “Smart Carbs” cereal range was derived from traditional grains such as sorghum and millet and has been developed with the health conscious consumer in mind.
“…previously advised the board has approved further investment into the cereal category which will allow the Group to further expand its repertoire of breakfast cereals and extruded products.
“This investment amounts to US$4 million and is set to avail an exciting range of affordable and nutritious breakfast cereals to the market. The project is on track to be commissioned mid-2022,” Mr Moyo said.
He said under the group’s maize milling department, as anticipated demand for maize meal was subdued following last year’s excellent harvest, and volumes declined by 7 percent compared to last year.
He added that the Pearlenta “Smart Carbs” range, meals made from traditional grains such as sorghum and millet, was launched during the period.
The group’s stockfeed volumes improved by 16 percent when compared to prior year. Feed volumes in the poultry category continued to show encouraging growth on the back of increased production in the small-scale sector, whilst beef feed volumes declined following the better summer season and consequent improved pastures.
Mr Moyo said the phased three-year upgrade of the Aspindale plant is now underway and has commenced with the installation of a PLC system which will enhance and optimise operational controls.
Flour milling volume for the flour unit increased by 3 percent compared to the same period last year, with both the Harare and Bulawayo Flour mills running at close to capacity.
Mr Moyo said the installation of a new mill at the Bulawayo site will commence in April and the mill remains on track for commissioning towards the end of 2022. “The new mill will increase wheat milling capacity by around 2,000 tons per month.”
In terms of the group’s overall volume performance, volume increased by 15 percent to 304,000 tons compared to the prior period.
“There was, however, a noticeable slow-down in volume momentum over the period as inflation picked up, with year on year volume growth of 24 percent in the first quarter and only 8 percent in the second quarter,” Mr Moyo said.
According to the group, revenue for the period increased by 96 percent to $24,9 billion, driven by volume growth and inflationary price increases.
“Gross profit grew by 81 percent below revenue growth, largely due to the inflationary driven gains that occurred in the prior year. Operational expenditure grew by 89 percent year on year, slightly ahead of inflation as certain costs were corrected in real terms,” Mr Moyo said.
The group’s earnings before interest depreciation and amortisation (EBITDA) increased by 78 percent to $3,53 billion, whilst profit before tax growth was more moderate, increasing by 34 percent to $3,12 billion.
“This was driven by a significant increase in interest costs in line with higher interest rates; financial loss where exchange losses were recorded this year whilst in the previous financial year there were gains emanating from property disposals; as well as a decline in equity accounted earnings of 36 percent, which was largely attributed to the disappointing result from Pure Oil,” said Mr Moyo.
He said the group’s financial position remains healthy with net debt of only $2,66 billion. – Herald