HARARE: Zimbabwe Stock Exchange listed Colcom Holdings Limited will spend about $7 million towards expansion as the company steps up efforts to compare its performance with regional producers.
Colcom group chief executive Dino Tumazos said the expansion projects had been identified. He was speaking after the company’s annual general meeting on Friday. Mr Tumazos said Colcom expects to put up a new facility to produce an additional 150 pigs per week by the third quarter 2016.
“We will invest in excess of $250 000 towards the expansion of new facilities for pig production but our capex for the current financial could run up to $7 million potentially,” said Mr Tumazos. Giving a trading update Mr Tumazos said the company’s revenue for the first quarter of the 2016 financial year is lower compared to prior comparable period.
He attributed depressed performance in the current quarter to weak economic fundamentals and rising competition. “Liquidity is tight and trading conditions are being made even more difficult with increased competition coming into a shrinking market.
“Cost efficiencies at CCC and processing efficiencies in both Associated Meat Packers and Colcom factories have reduced that deficit at gross profit level,” said Mr Tumazos. Operating expenses for the period were flat compared to the first quarter of the 2015 financial year.
He said as a result, profit before tax was below that achieved same period last year. On operations, the group’s new pig production facility came on line in the first week of July and reached full production of 300 pigs per week by mid-August.
This resulted in the farms delivering 24 percent more pigs in the first quarter of the financial year 2015 against those delivered last year. The increase in revenue combined with cost efficiencies achieved allowed the farms to show a growth in profitability over first quarter the previous year.
Colcom Foods’ volumes for the period were flat on prior year, but competitive pricing into the market had taken some value away from revenue posted against the comparative period. Mr Tumazos said the new Pie Factory commissioned in August this year is “now performing to expectation”. At AMP, revenue during the period under review was slightly behind that reported in the prior comparable period.
But processing efficiencies and cost controls helped to close the gap somewhat at profit before tax level. Mr Tumazos said the company pins hope on ongoing expansion programmes. At AMP the company expects to pen the new Texas Meats branch in Bindura in early December. He said additional shops will be developed as appropriate sites are identified.
