Shut downs, retrenchments weigh down Dairibord

HARARE - Listed milk processor Dairibord Zimbabwe Holdings Limited (Dairibord) incurred a $3,1 million operating loss in the half-year to June 2013, wieghed down by plant rationalisation and retrenchement costs.

Early this year, the group shut down its Bulawayo and Mutare plants to remain with two in Harare and Chitungwiza.

The move was targeted at consolidating operations and cut costs.

Leonard Tsumba, the group's chairperson, said the $4,3 million once-off payment — which related to retrenchment packages, relocation of plant and equipment and impairment of equipment, spares, materials and receivables — ate significantly into the company’s headline earnings.

“The first half of the year presented the group with major challenges since the adoption of the multiple currencies.

“However, rationalisation of the operations and other costs reduction measures implemented by management, have put the group in a strong position,” he said.

Zimbabwe’s largest milk processor’s turnover in the period under review increased by one percent to $49,1 million, while sales volumes decreased by 0,6 percent from 32,22 million litres in 2012, to 32,04 million.

Dairibord’s liquid milks volumes surged eight percent while food products jumped 13 percent.

The group’s beverages declined by 12 percent.

“Liquid milks benefited from increased raw milk intake in Malawi, and importation of processed Ultra High Temperature (UHT) milk from South Africa. Foods continue to benefit from investments made in yoghurt, tomato sauce, salad cream and ice cream,” said Tsumba.

The Dairibord boss noted that increased capacity and brand building will continue to enhance competitiveness.

“The beverages category was, however, affected by stiff competition and limited product availability, particularly the Dairibord Aqualite brand,” he said.

In the six months to June Dairibord’s total operating costs — excluding the once off expenses of $4,3 million — increased by eight percent over the same period in 2012, mainly on account of increases in costs of key materials and wages.

Tsumba said raw milk intake grew by two percent to 13,3 million litres, from 13,1 million litres received in the same period last year.

“Zimbabwe recorded a one percent decline while supplies in Malawi increased by nine percent,” he said, adding that efforts of the milk supply development unit in Malawi are beginning to yield the desired results.

“Heifers imported under the Heifer importation Scheme in Zimbabwe are currently providing an additional four percent of raw milk per month which is in line with target,” said Tsumba.

Going forward, Dairibord expects to return to profitability in the second half of the year.

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