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Business Reporter
DIVERSIFIED industrial conglomerate, Innscor Africa Limited’s profit for the year to June 30, 2020 jumped 97 percent to $3,6 billion despite a challenging operating environment.

The environment remained tough for businesses on the back of diminishing consumer spending, foreign currency shortages and high inflation compounded by the effects of Covid-19 pandemic.

Group chairman, Mr Addington Chinake, said the company’s improved product mix, coupled with a well-priced strategic raw material investment, enhanced production and overhead efficiencies, combined to deliver an operating profit of $3,85 billion representing a growth of 54 percent over the comparative year.

At $4,54 billion, profit before tax was 69 percent above the comparative year, whilst overall current annual headline earnings per share of 450,56 cents was achieved, which was an increase of 84 percent on prior year.

Total revenue came in at $23,9 billion, which was a 24 percent increase on the comparative year attributed to a mixed volume performance, the gradual removal of subsidies on most products, as well as inflation-induced price adjustments. Despite the reduction in net gearing levels, resulting from scarce liquidity and the steady devaluation of the local currency, the net interest expense increased, mainly due to the various monetary policy measures that resulted in a higher cost of borrowing from local financial institutions.

The group’s associates recorded positive earnings performances with all business units contributing positively to the overall result. At National Foods, the firm delivered a solid performance, notwithstanding a 25 percent volume drop against the comparative year to 456,000 tonnes, driven largely by reduced consumer purchasing power.

In the bakery division, overall annual loaf volumes declined by 36 percent against the comparative year as limited flour availability at the necessary pricing level required to maintain loaf pricing within the regulated pricing framework characterised the first half of the financial year, resulting in lower production.

The Covid-19 lockdown restrictions implemented effective March 30, also had a negative impact on volumes due to reduced trading hours in formal channels, coupled with limited accessibility to the large informal sector.

“Focus remains on re-building the volume base to pre lock -down levels, widening the product offering, investigating sustainable auxiliary power and water solutions and further automating production,” said Mr Chinake in a statement accompanying the group’s financial results.

Associate company, Profeeds, recorded a 36 percent decrease in feed volumes and a 25 percent decrease in day-old chick volumes against the comparative year.

Mr Chinake indicated the majority of this volume decline was within the retail platform, which serves the small-scale segment of the market. This was a reflection of subdued consumer spending, evolving consumer demand in response to market trading conditions, and the effect the Covid-19 lock -down restrictions on market dynamics.

The Colcom division comprising Triple C Pigs and Colcom Foods, recorded an 18 percent decline in overall sales volumes. Irvine’s experienced a 13 percent volume growth in table eggs, with volumes as achieved being a record high for the business. Frozen chicken volumes and day-old chicks’ volumes went down 21 percent and 27 percent respectively on subdued demand in the small-scale farmer market. Volumes at AMP Group grew seven percent on the back of growth in retail market, which saw the first Texas Meat Market open in Bulawayo.

Other light manufacturing services, Natpak, Prodairy and Probrands recorded growth in volumes of 18 percent, five percent and four percent respectively while Probottlers went down 20 percent mainly due to power supply challenges.

Despite the challenging operating environment, management remains upbeat of future performance supported by various strategies put in place. One of them is continued support for contract farming partnerships.

“The group remains the largest grain user in the country and efforts to build internal capacity through contact farming, smart partnerships and small-scale capitalisation to supplement the supply of imported raw materials will continue,” said Mr Chinake. The group declared a final dividend of $1 a share.