Innscor bemoans cash crunch

HARARE - Diversified group, Innscor Africa (Innscor), says the delays in foreign transactions are threatening business with suppliers waiting long periods to get their dues.

Innscor chief executive Julian Schonken, yesterday told shareholders in the capital that as a result of delays in payments to foreign suppliers, the company faced a threat of critical raw material importation.


“Liquidity remains very tight and the ability to make foreign payments for critical raw materials poses a serious and substantial risk to our businesses,” he said.

As a result of delays in processing of foreign payments, Innscor’s associate Probrands missed its UHT plant commissioning date, which has since been postponed to January next year.

Schonken pointed out that the group — which recorded a seven percent growth in revenue for the first quarter of 2017 financial year — continued to operate in a challenging environment.

“Notwithstanding a good start to the financial year, conditions remain very challenging for all businesses…,” he said, adding the profitability growth in the first quarter had been marginally ahead of revenue growth driven by good cost control and improved equity accounted earnings.

The Innscor boss also said disposal of non-core assets in neighbouring Zambia was on track and expected to be complete by year end.

This comes as the group announced plans to exit the Zambian market early this year through disposing The River Club — a luxury lodge near Victoria Falls — and Spar operations in that country.

Meanwhile, National Foods, a subsidiary of Innscor’s recorded a 10,5 percent growth in quarterly volumes at 139 000 metric tonnes driven mainly by flour and to a lesser extent rice.

Bakery operation continued on its recovery path, with a small volume increase being recorded against both the comparative quarter and the final quarter of 2016.

Colcom recorded increased volumes, particularly in the fresh meat and pie categories, with Schonken pointing out that while these volumes did result in increased revenue, the reduced average selling prices resulted in similar gross margins being achieved.

However, Irvine has experienced a difficult first quarter as volumes in all three categories were higher than those recorded in the comparative quarter, but a combination of much lower average selling prices and increased raw material costs led in reduced gross margin levels and lower levels of profitability.

Another set of excellent results was recorded at Natpak during the first quarter as volumes in both the major products (sacks and flexibles) continued to be strong, with revenues growing by 19 percent against the comparative quarter.

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