Innscor Africa reports 45% growth in half year revenue boosted by improved performance across most categories

ZIMBABWE – Innscor Africa Limited, an expansive manufacturing and retail conglomerate in Zimbabwe, has reported 45% growth in half year revenue for the six months to December 2020.

The rise from ZWL 19.1 billion (US$52.7m) of the corresponding period in 2019 to ZWL 27.7 billion (US$76.5m) was driven by strong volume performance across most units, the removal of subsidized pricing on certain core product categories, and pricing policies that were implemented to secure inventory replacement.

According to the company’s financial statement, the operating environment was characterized by fragile macro-economic environment but relatively stable, with a marked reduction in inflation and an associated improvement in consumer and business confidence.

The easing of COVID-19 lockdown restrictions towards the latter part of the period also enhanced trading conditions.

However, the group’s Profit dropped 12% to ZWL$2.394 billion (US$6.35m) from ZWL$2.708 billion (US$7.48m) owing to increased operating expenditure following escalations in certain cost buckets.

Cash generated from operations went up 774% to ZWL$7.2bn (US$19.8m) during the period under review from ZWL$825m (US$2.27m) while total assets stood at ZWL$39.7bn (US$109.6m).

Associates’ Performance

Looking at performance in each division, National Foods’ volumes increased by 56% with solid growth in both the baker’s and prepack flour segments.

The increased consumer demand was driven by pricing stability on the back of support from the foreign currency auction and competitively priced local wheat.

The division has initiated its long-term manufacturing facilities upgrade programme commencing with the purchase of a new state of the art flour mill, which will be installed as a replacement for the existing mill at the Bulawayo Basch Street site.

“This significant project has been carefully planned to ensure continuity of flour supply to the southern region during the installation phase, and is expected to be completed by the end of 2022,” said Innscor Board chairman Addington Chinake.

Maize meal volumes on the other hand were disappointing and declined by 23% relative to last year, in spite of the fact that last season was a drought year which ordinarily results in firm demand.

The decline was due to the market adjustments that took place following the conclusion of the subsidy program, as well as intense competition from imported maize meal, notably from South Africa.

In the Stock Feed division, volumes improved by 34% over the comparative period. This encouraging result was driven by the poultry category, where volumes increased by 56%; beef feed volumes were however muted, declining by 5% on the back of good early rains and a general reduction in cattle feeding.

Volume growth in the Grocery division was significant at 98% over the comparative period. The solid growth was achieved across the category portfolio on the back of competitive pricing.

As with Groceries, volumes in the Snacks and Treats division were also strong, registering a 57% growth against the comparative period.

Pure Oil delivered another strong performance, with volumes increasing by 64% over the comparative period with strong volume growth in cooking oil, soap and margarine.

The Bakery Division recorded a 26% increase in loaf volumes against the comparative period.

The division has continued to display good volume recovery, which has resulted from both a reliable and consistent flour supply, and general price stability in its bill of raw materials.

Its Profeeds unit registered a favourable performance against the comparative period, with an 18% increase in stock feed volumes being recorded as pricing stabilised and the poultry value-chain recovered.

The group’s poultry segment comprising of Associated Meat Packers (AMP), Irvine’s and Colcom Division reported a 9%, 10% and 31% volume growth respectively.

Its other light manufacturing and service segment also reported growth in performance with Natpak delivering a 26% volume rise, Prodairy volumes increasing by 47%, Probottlers delivering a 57% increase and Probrands 43% volume jump.

Innscor to splurge US$70m in new projects

The deep pocked group is planning to invest US$70m in new projects in the next 18 months as part of efforts to enhance product quality, improve efficiency and improve production capacity.

The Board chairman said the planned projects will be in the milling, baking, protein, and packaging and beverage categories whilst investment opportunities into new, adjacent categories and products will also continue to be assessed.

“The group has approved an investment pipeline of US$70m covering ongoing business optimisation initiatives, as well as the further expansion within existing business units. These exciting projects, will occur over the next 18 months,” Chinake concluded.