Dairibord turns fortunes

HARARE - Dairiboard Zimbabwe Limited (DZL) reported impressive 2017 financials on the back of firm demand across all segments, improved capacity and a more streamlined cost structure after two years of restructuring.

The milk processor — which recorded an operating loss of 3,9 million in 2016 — posted an operating profit of $4,058 million in the year to December 31, 2017.

“After accounting for once off retrenchment costs of $0,847 million and a net interest bill of $0,740 million, the group recorded a profit before tax of $2,471 million, compared to a 2016 loss before tax of $4,881 million,” DZL chairperson Leonard Tsumba said in a statement accompanying the firm’s financials for the period under review.

Sales volumes rose eight percent year on year to 89,4 million litres accompanied by a marginal two percent year on year uplift in average sales price resulting in group revenue growth of 10 percent year on year to $103 million.

“There was firm market demand across all product categories, and increased capacity to support beverages and liquid milks benefited volumes.

“Volumes achieved were, however, not optimal due to forex driven product shortages, adverse weather conditions in the first quarter of the year, and sales disruptions during system migration on consolidation of the operations,” Tsumba said.

Cartonised UHT milk and Pfuko volumes grew significantly, benefitting from increased capacity invested in 2016.

Other product lines which recorded growth, on account of firm demand, were Steri milk, yoghurts, and condiments.

Revenue increased 10 percent, to $103,2 million, on account of the eight percent volume growth and a two percent nominal price adjustment effected to mitigate cost increases.

Overheads came down 16 percent year on year yielding an EBITDA result of $9,5 million up 657 percent and implying an EBITDA margin of nine percent.

Net income came in at $1,35 million turning around a loss position of $5,5 million in 2016.

“The new low cost operating model adopted will continue to benefit the business in the future. Dairibord Malawi Limited recorded an operating loss of $0,550 million, an increase on the 2016 operating loss of $0,146 million,” the DZL boss said.

He said going forward, noting the progress made by the business to date, and the renewed optimism for economic turnaround, focus will be on improving profitability through volume growth and cost containment, optimally utilising cash resources to procure inputs required.

The board declared a dividend of 0,20 US cents per share for the year payable on or around May 28, 2018.

—The Financial Gazette

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