HARARE: Innscor Africa Limited said revenue for three months to September rose 7 percent compared to same quarter last year on increased volumes across its product portfolio and cost management.Chief executive Mr Julian Schonken told an annual general meeting yesterday that profitability growth for the quarter was ahead of revenue growth, albeit in a challenging operating environment.
“Not withstanding a good start of the financial year, conditions remain very challenging for all businesses,” he said, adding lack of foreign currency for critical raw materials posed a threat to the business. National Foods recorded a 10 percent increase in volumes to 139 000 tonnes driven by flour and rice.
Lower average selling prices resulted in marginal revenue growth but with a knock on effect on gross margins.
The group’s recent investment into Pure Oils is performing strongly and Zimgold has established itself as the country’s leading oil brand in a short space of time.
This led to improved equity accounted earnings and improved profitability at the PBT line, said Mr Schonken. Pure Oils management is seeking land to grow soyabean to boost raw materials supplies.
The company accounts for 70 percent of the country’s monthly cooking oil requirements of 10 million litres. The bakery operations recorded a marginal volume increase compared to the previous quarter.
“Profitability levels remained good. The business launched its new half loaf during the quarter and initial results have been extremely encouraging,” said Mr Schonken.
The bakery unit’s pie products re-launched in the quarter and volume targets have been well exceeded. At Colcom Foods, volumes increased particularly in the fresh and pie categories.
Natpak recorded volumes in both major products (sacks and flexible) “continued to be strong” with revenue improving 19 percent against the comparative quarter.
However, the relative strengthening of the South African rand in the period resulted in slight increase in cost of raw materials which pushed gross profit margins lower than comparative quarter.
Schonken said the group will continue to scout for growth opportunities and the process to enhance capacity in the flexibles category was at advanced stage.
At Probrands, overall volumes increased 10 percent compared to same quarter last year on strong performances in rice and dairy categories, resulting in growth in profitability. The group anticipates commissioning its UHT line next month.
The initial commissioning was scheduled for this December but postponed due to delays in securing foreign payments for final capital commitments. Despite positive results from other businesses within the Innscor group, Profeeds had a challenging first quarter as feed volumes fell 15 percent against comparative quarter due to depressed chicken market.
Revenue and profitability were weaker compared to same quarter last year.”The business has seen some encouraging volume growth at the onset of quarter two, but marginal feed prices against rising costs of raw materials will remain a key challenge,” said Mr Schonken.
