Drought & lockdowns hinder Dairibord FY-20 performance

Author Name
Rugare Mukanganga
Stock Market 1 month ago

In the year ended December 31st 2021, the Dairibord Group faced a combination of mostly-external operational challenges that drove up costs, stifled raw milk production in the period. The first half of 2020 was plagued by inflationary pressure and national lockdowns, temporarily disrupting Group operations; while Q3 and Q4 were met with relative macroeconomic stability following the introduction of a foreign currency auction system that gradually stabilised inflationary movement.

Raw milk intake declined 6% in the period. The intake drop was reportedly an accumulated effect of droughts in preceding years which hampered availability of stock feeds in the market. With less key inputs throughout the year, production volumes were down

Due to Covid-19 induced recurring lockdowns, retail hours were periodically reduced, pushing sales volumes down 12.5% below 2019 volumes. Additionally, supply-chain disruptions during Covid-19 lockdowns led to a 6% decrease in export revenues compared to prior year inflows.

As a result, Group revenue for the year fell 6%.

Operational expenses grew 10% in the period, with the Group taking-on ZWL 363 million in short-term funding – 316% more than prior year current liabilities. Operational profit was therefore down 43%, with the Group ending the year with a loss of ZWL 76 million.

In the coming financial year, the Group looks to AfCTA as both an opportunity and threat. In the interim, the Group plans to buckle-down and regain competitiveness through better operational efficiency. Group working capital improved in the just ended financial year, giving Dairibord flexibility to make short to medium term operational plans such as strategic prepayments and inventory purchases.

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