National Foods remodels maize segment





HARARE – Food processing giant, National Foods Holdings Limited, says it is taking a cautious approach and remodelling its maize segment to ensure it continues to make a sustainable contribution to the group.

This comes as local maize production has shown a significant recovery this year, but concerns are that the harvest will, however, impact demand for maize meal as consumers utilise their own harvested maize.

During the financial year to June 30, 2021, the maize segment weighed on profitability although total volumes rose 15 percent to 525 000 tonnes compared to the prior year.

The maize segment went down 32 percent largely on the back of intense competition from imported maize meal and the discontinuation of the subsidy programme and proliferation of cheap imports.

Chairman Todd Moyo, indicated that excluding maize, the year-on-year volume growth across all categories was 48 percent driven by improved consumer demand and a steadily improving market presence across the portfolio.

On financial performance, the group’s revenue for the year under review rose 26 percent to $33 billion from $26 billion on the back of the volume growth as well as the impact of inflation.

Operating profit fell 70 percent to $1,2 billion while profit before tax fell 85 percent to $470 million.

Profit for the year plunged 97 percent to $72 million from $2 billion recorded in the previous year. Basic and diluted earnings per share went down 97 percent to 105 cents.

“This was a muted performance relative to the rate of inflation and was largely caused by lower gross margins across the portfolio, the performance of the maize unit, as well as significant increases in operating expenditure and interest costs,” said Moyo.

Moyo said gross margins were impacted by the declining inflation, as gains on prepaid raw materials reduced relative to the prior period as well as general pricing restraint in view of the strategic intent to grow volumes in a recovering market.

Operating expenditure increased by 327 percent as costs normalised in real terms with the slowing inflation.

As the economic environment continues to stabilise, Natfoods is also working improving efficiencies as the group position itself to cash in on the anticipated economic growth.

Said Moyo: “The company continues to explore a number of opportunities, largely of a forward integration nature. In summary, National Foods is optimistic at the current trajectory of the economy and is taking a number of proactive initiatives to further develop and grow the
business in line with the improved circumstances.”

Other key segments such as the flour recorded volumes increased by 43 percent compared to the prior year on the back of strengthening consumer demand.

While growth occurred in both the baker’s and prepack flour segments it was especially strong in pre-packs as consumers resorted to home baking with the Covid-19 induced lockdowns and movement restrictions in place.

Stockfeed volumes jumped 33 percent when compared to prior year driven by the poultry category, where volumes increased by 53 percent relative to prior year. But beef feed volumes eased 14 percent on the back of good early rains and a general reduction in cattle feeding.

According to the group, the significant increases in international crude oil prices had a knock on effect on Pure Oil, although the unit registered a 75 percent volume growth as the unit introduced green bar soap and margarine categories

The group declared a final dividend of 296,49 cents per share bringing the total dividend for the year ended 30 June 2021, to 1 099,76  cents. – Business Weekly