HARARE: National Foods Holdings Limited has recorded a 3% decline in revenue to $78,3 million for the first quarter ending September 30, 2015, due to a reduction in flour pricing.
Speaking at the company’s annual general meeting yesterday in Harare, National Foods chief executive officer, Michael Lashbrook said volumes grew by 5% to 131 000 tonnes compared to the same period last year.
“Our revenue is $78,3 million, which is 3% lower than the same period last year. The reason for the reduction in revenue primarily is in two folds, first a reduction in flour pricing in line with the raw materials pricing and secondly an issue with more maize and soya on the mix,” he said. Lashbrook said the group has to be aggressive on pricing to grow profitability.
In the period under review, capital expenditure was at $9,9m, which went to the flour business ($4,5m) and $2,3m for backup generators.
“You will recall from our previous updates that we are now on year two of a three-year programme to upgrade our flour mill. We are seeing increased operating efficiency and we are realising benefits of that capex I our efficiencies,” he said.
Lashbrook said the company has decided to invest in backup generators, for power supply for its Harare plant due to power outages.
“In respect of growth, I am happy to report that we continue to pursue our growth agenda. We have a number of opportunities in the pipeline at various stages of development and we will share with you the specific details once the necessary governance and regulatory approvals are complete,” he said.
Lashbrook said the company has adequate cover for wheat, maize and soya, with 4 200 hectares of wheat coming from contractors. He said 5 000ha was coming from National Foods Holdings partner, PHI, with output expected in June 2016.
“I am happy to report in respect of wheat, we are adequately covered. Lots of that coming from our contract farming programme, where we grew 4 200ha of wheat in the last winter wheat season and that produced around 25 000 t of wheat.
We are currently, with our partners PHI, planting another 5 000ha of contract crop for the current summer season that is, 3 000ha of maize and 2 000 of soyabeans.We look forward to see that product coming through in June next year. “In terms of maize, we are sitting on three months cover and we are obviously working closely to manage our pipeline through to the next harvest,” he said.
