|In the first half of 2021, the economy has seen some stability that has seen consumer spending increase as buying power was partially restored. This has seen milk and milk products demand increase in the opening half of the year. Evidently, Dairibord saw increased volumes in 2021 half yearas reported by ETimes yesterday.|
Raw milk production is now the problem the milk processor has to deal with in order to continue with the good results shown so far. However, national milk production in 2021 has so far been on a decline due to a number of factors with pricey stock feed being the primary problem. Stockfeed accounts for about 82% of milk production and this have resulted in substitute feeding reducing the average litres per cow.
Generally, the country does not produce enough milk. In 2020, milk production was 76.7 million litres, against annual demand of 120 million litres. This means local dairy companies have to import milk powders for processing, to fill the gap. National milk output is expected to further decline to 85.6 million litres from 92.3 million litres in 2020, according to the treasury and this will hit hard on Dairibord.
An improvement in revenue was recorded but the contribution per sector took a change as beverages led on contributions. Liquid milk and foods saw a decline in contribution as beverages outdid themselves to cover for the low milk production. Liquid Milk revenue contribution was down to 36% from 43% in the prior year, as foods contribution to revenue slid to 15% from 17% in 2020. Beverages which have been extensively marketed in the last quarter saw their contribution to revenue rise by 10 percentage points to 48% from 38% in the same period last year.
EBITDA grew 367% to ZWL$314.58 million from ZWL$67 million in the same period in 2020 and this saw the margin return to its historical average of 8.5%. Gross profit margins slipped to 23% from 26% in the previous period owing to a sharp increase in cost of sales. Export revenue contribution was down to 3.36% from 5.31% in the previous period – Harare