Senior Business Reporter
AGRO-processing firm, National Foods Holdings, plans to spend close to $10 million in the 2016 financial year with the bulk of the funds going towards the ongoing plants upgrade.
Todd Moyo, the group’s chairman, in a reviewed financial statement for the six months ended December 31, 2015, said capital expenditure for the current financial was expected to be around $10 million.
“The majority of this investment will be directed towards the ongoing refurbishment of the flour mills as well as a substantial investment into back-up generators for our major manufacturing facilities,” he said.
Moyo said the group’s financial position remained strong with net working capital closing the half year at $47,81 million against $50,06 million at the interim stage of the 2015 financial year.
During the period under review, a considerable amount of working capital was invested in key raw materials such as maize.
National Foods operates flour and maize milling divisions, stock feeds and medium-scale consumer goods.
The group is also involved in contract farming and presently supports local farming with 5,200 hectares of maize and soya beans having been planted this summer cropping season.
“Purchases from the 2015 winter wheat crop amounted to 25,000 tonnes, the bulk of which came from the National Foods supported contract growing scheme,” said Moyo.
Flour division production volumes increased by four percent compared to the comparative prior period.
Growth was driven mainly by the baker’s category while the pre-pack category saw volumes flat on the comparative period.
Moyo added that the intensive three-year programme to refurbish Harare and Bulawayo flour mills to international standards was now into its second year and progressing as planned.
“The continued improvements in the operational efficiencies of the plants are very encouraging and have left a more sustainable and competitive business,” he said.
On the maize milling division Moyo said the plant saw a substantial increase in volumes of 66 percent versus the comparative prior period.
“The volume growth was driven by an aggressive pricing strategy as well as increased demand following a reduced 2014/15 harvest,” he said.
Moyo said the stock feeds division produced reasonable performance with volumes increasing marginally over the comparative prior period.
On the overall side, the group during the six months period recorded profit before tax of $8,86 million, which was one percent above the same period last year.
This was primarily on the back of strong performances in the maize and flour divisions.
“Revenue for the period increased by 2,4 percent to $170,98 million, with the disparity between volume growth and revenue growth being a result of management’s strategy to lower average selling prices and grow share in an increasingly competitive market,” he said.