• Mon. Apr 15th, 2024

In 2022 Dairibord spent $1.8 billion on capital investments

ByEconomic Times

Jul 11, 2023

By ETimes

Listed diversified consumer staples company, Dairibord Zimbabwe is anchoring on its recently commissioned plants to boost volumes for some of its product lines in the full year 2023.

In a statement, Dairibord chairman Mr. Josphat Sachikonye said, “Volume growth in 2023 will be underpinned by recently completed capital investment projects which include a third maheu (Pfuko) line, a drinking yoghurt (Yoggie) line and a third blow moulder for Steri milk bottles.”

In the year 2022, Dairibord added a new chilled water plant which was installed at the Harare Rekayi Tangwena factory to optimise production capabilities.

According to the group, borrowings amounting to $1,8 billion were invested in capital expenditure projects to increase production output and to fund long working capital cycles.

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In addition to the capital investments, the group said it will continue to seek value-adding opportunities and will leverage initiatives in raw milk production growth, our diversified product portfolio, effective pricing models and route- to-market strategies for sustained growth.

“Cost containment and cost reduction through improved productivity and efficiencies are also key focus areas to improve profitability,” the chairman added. 

“The negative consequences of extended lead times throughout supply chains, delays in payment from the foreign currency auction system and increased labour costs exerted pressure on costs and margins. Inconsistent supply of quality water and power impeded and increased manufacturing costs.”

The group believes erratic supply and high cost of quality water and electricity will persist, increasing the cost of production, and disrupting operations.

Despite the plethora of problems, Dairibord recorded positive volume growth compared to prior year.

The group recorded inflation adjusted revenue of $63,38 billion during the financial year 2022, a 40 percent increase on the comparative period. Moderate volume growth and price adjustments to protect margins were the main drivers of revenue growth.

Resultantly, operating profit grew 154 percent to $6,31 billion compared to $2,37 billion reported in 2021 and the operating profit margin for the period was 10 percent up from 5,24 percent in the prior period.

“This success was made possible by maintaining focus on diversifying and expanding product portfolios, implementing affordable pricing models and consistent review of the route-to-market strategies. All these efforts were further aided by ongoing investments in increased manufacturing capacity and capabilities,” Mr. Sachikonye added.

In order to deal with the water and electricity problems, the group said it will continue to engage in strategic partnerships and explore initiatives for alternative energy models and efficient production methods – Harare

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