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Oliver Kazunga Senior Business Reporter
NATIONAL Foods’ three-year refurbishment programme for its Harare and Bulawayo flour mills is underway with the firm channelling $4.1 million towards the project in its current financial year.

The listed group’s profit before tax for half year ended December 31, 2014, went down by 4.7 percent to $8.78 million on the back of a poor performance of the maize business.

The agro-processing firm’s financial results for the period under review indicates the maize business volumes declined 28 percent compared to prior period as a result of a significantly improved 2013/14 local harvest, mainly in Matabeleland and Masvingo provinces.

“Excluding the maize division, revenue for the half year grew by 10.9 percent despite a moderate performance by the stockfeeds division. During the period, consumer disposable income declined further in the face of reducing formal employment.

“In addition, deflationary pressures continued with consumer price index recording food and non-alcoholic beverages prices deflating at 2.6 percent for the year to December 2014,” board chairman Todd Moyo said.

He said this, together with a devaluing rand, significantly heightened competitive pressure against imported products.

The authorities, he said, were cognisant of the situation and moved to protect local industry through enhanced monitoring of imports.

“This supported volumes in certain parts of the business, notably the flour division,” he said.

Giving an overview of the financial performance, Moyo said total volumes increased marginally during the period, while changes in product mix across most categories reduced margins and resultant profitability.

“All in all costs declined by two percent versus last year as the various efficiency improvement and cost maintenance measures began to bear fruit. The group consumed $5.9 million of free cash and this was primarily directed to seasonal holdings of maize, wheat and stockfeeds raw materials,” he said.

Moyo said National Foods continues to support local farming, adding the firm recently completed the 2014 wheat scheme having provided input support to the tune of $3 million and funding 3,300 hectares of maize and soya beans.

He said the flour milling division performed well during the period under review with volumes increasing 15.5 percent compared to the prior period.

“The volume growth was driven primarily by the bakers’ flour channel, while in the pre-pack flour segment Gloria and Red Seal continued to perform strongly on shelf”.

Moyo said the stockfeeds business had a subdued half year, with volumes declining 5,5 percent compared to the same period last year. This was driven by a combination of lacklustre feed demand, disappointing sales to small-scale poultry farmers and the fact that some non-governmental organisations-based livestock support programmes were discontinued following an excellent 2013/14 rainy season.

He said the fast moving consumer goods division continued to make an increasingly important contribution to the group with volumes increasing 18.4 percent compared to prior year.

On the group’s future prospects, he said, with the exception of flour operations, the manufacturing facilities were now largely operating to expectation.