• Mon. Apr 15th, 2024

Padenga plans US$2 million in capex on crocodile business

ByEconomic Times

Jun 20, 2023

By ETimes

Padenga says it will spend about US$2 million on capital expenditures for the crocodile division.

This comes as the group is working on crocodile pen rehabilitation, which is essential to attempts to increase skin quality.

“We are actually, at the moment, exceptionally tight on capex expenditure,” chief executive officer Gary John Sharp told the company’s annual general meeting recently.

“We are focusing on retiring debt, so we are only spending on what we deem to be essential capital requirements, and most of that this year is focused on the resurfacing of pen floors. So, we will spend under US$2 million on crocodile division this year.”

In 2022, the group generated US$127,89 million in revenue, which was a 68% increase from US$76,10 million in 2021.

Of last year’s total revenue, the mining business line contributed 82%, while Zimbabwe crocodiles contributed 18%.

The operations of the firm have adjusted to the creation of the smaller skin sizes in response to the shift in customer preference from huge handbags to tiny handbags and the improvement in skin ratings by off-takers.

As a result, IH Securities said in its recent earnings update that sales volumes should start to normalize.

To enhance skin quality, Padenga has also made research and development investments.  

“Hence, we forecast an uptick in skin sales in the current financial year compared to previous year,” it said.

The group’s EBITDA for the year increased to US$32.28 million from US$14.17 million in FY21.

It realised a fair value gain of US$2.69 million on its biological assets, primarily as a result of higher average skin prices anticipated for FY23 and more cattle on hand at the conclusion of the present year.

The mining business’s decision to restructure its borrowings is primarily responsible for the marginal reduction of 3% in interest expenditure for the group, which was recorded at US$9.96 million.

The increase in revenue, cost-cutting initiatives, and the change in the fair value of biological assets from a loss to a gain allowed the group to realise a profit before taxation from ongoing operations of US$13.89 million for the year as opposed to a loss before taxation recorded in FY21 – Harare

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