Dairibord plans $10m capex

HARARE - Listed milk processor Dairibord Holdings Limited (Dairibord) says it plans to commission five plants worth $10 million this year.

Its chief executive, Anthony Mandiwanza, told an annual general meeting on Friday that the capital expenditure projects were going according to plan.

“We would be launching a new plant in Chitungwiza by May 21, 2014 and the new product from this plant will expand revenue streams for the group and enable the business to be competitive,” he said.

The group is also looking at commissioning a purified water plant by June and an ice cream plant a month later.

Last year, it secured a $6 million loan from the PTA Bank at 10,3 percent interest.

“We have also procured equipment for our yoghurt plant, which will be commissioned by July 10.  We are hoping that this plant will help us to deepen and widen our market reach in areas that we previously couldn’t reach,” Mandiwanza said.

He said they expect to commission a sterilised milk plant by November this year.

Meanwhile, the group, which produces about 40 percent of Zimbabwe’s 50 million annual raw milk output, incurred a $1,7 million loss in the year to December 2013 from a $7,1 million after tax profit realised prior year as volumes declined under pressure from cheaper imports.

Revenue went down six percent to $100 million while the company reported $4,6 million in impairments for plant, equipment and inventories.

Mandiwanza noted that the company was set to rebound and the $10 million capital investment will boost capacity and efficiencies.

The group, which has invested $21,6 million on capital equipment between 2009 and 2013, spent

$800 000 in retrenchments costs after shutting three local factories, cutting 240 jobs in the process.

“We want to further reduce the factories to three and have a staff complement of 1,495 by year end,” Mandiwanza said.

During the period under review, the cost of producing milk in Zimbabwe was higher at 64 cents per litre compared to 40 cents and 44 cents in South Africa and Zambia respectively, he said.

Going forward, Mandiwanza said Dairibord will add 200 heifers, which would significantly increase milk output.


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ORIGINAL - 20 May 2014

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