Colcom’s Q1 GP weighed down by price reductions
HARARE, Colcom Holdings revenue for the first quarter of 2017 is slightly higher than prior year comparable period largely on increased volumes traded.
Group Chief Executive Dino Tumazos told the AGM that the increased revenue however could not directly translate to a growth in gross profit due to the reduction in average selling prices.
“The reduction came about primarily from a direct reduction in prices of products across the whole range of products over the prior year comparable period but has been compounded by a significant shift in sales mix from processed foods to fresh meat and carcass sales,” he said.
Tumazos said the Group managed costs further with all business units achieving modest savings in operating expenses over Q1 prior year. “The result of the above is a PBT marginally ahead of that achieved in the comparative period last year,” he said.
At Triple C Pigs, the pig production facility came on line in March 2016 and added 150 pigs per week to output. Tumazos said the line contributed to the 34% increase in pigs delivered in Q1 F2017 compared to those delivered prior year.
He said the increase in volumes has naturally contributed to an increase in revenue at Triple C, but unfortunately the cost of key raw materials specifically maize has increased significantly, offsetting the benefits of production efficiencies achieved.
At the end of the quarter, the cost of maize charged to production was 15% higher than that charged in prior year. Tumazos said the regional shortage of maize will result in further increases in raw material prices before the next harvest, but CCC has secured its maize requirements to February 2017.
Colcom Foods volumes were up but competitive pricing in the market and a significant shift in the sales mix held back the growth in revenue to modest levels.
Tumazos said the additional delivery of pigs has allowed volume growth in carcasses but fresh pork competition had partly eroded market share gains achieved during FY16.
AMP saw revenue in Q1 slightly behind the comparative period with volume increases negated by depressed beef prices.
During the quarter, Texas Meats opened shops in Makoni and Chegutu and a new Texas Chicken in Glenview. The group expects to open new Texas Meats branch in Gweru and Mutare in the ensuing year.
Meanwhile, at the AGM directors and audit fees were approved at $38 624 and $138 711 respectively.