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DZL banks on new business model to spur growth

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DZL banks on new business model to spur growth

HARARE – Dairibord Zimbabwe’s ongoing transformation anchored on a new business model has begun to show positive returns with overall outturn for H1 2017 expected to be better than the prior comparable period.

Giving a trading update for the four months to April 2017 at the company’s AGM held today, chief executive officer Antony Mandiwanza said, “Overall performance is better than last year, a manifestation of the benefits of the turnaround strategy deployed by the Group effective January 2017”.

According to Mandiwanza, the business has been remodelled to align revenue and costs. Performance however improved in March and April and is on a cumulative recovery. During the four month period, selling price per litre and market share remained stable.

“In FY16 we agreed on a strategy that will move the company forward, largely due to a mismatch that existed between revenues and costs. As a result of that we are beginning to see the benefits and we want to promise shareholders that 2017 will not be as bad as was FY16,” he said.

Mandiwanza said Group revenue to end of April is 2% below that of 2016, largely because the period January and February was affected by incessant rains and system migration challenges during consolidation. Profit margins improved as operating costs are trending lower than prior year and in line with the turnaround strategy.

He said supply of cartonised Chimombe is now stable following the full commissioning of the new UHT carton plant. He added that product quality has also significantly improved.

Mandiwanza also said the Group enhanced its information systems to improve control environment around inventories and trade receivables. He added that the SI64 instrument is positively impacting the foods category.

Nonetheless, raw milk intake declined during the quarter due to incessant rains in January and February which adversely impacted yields per cow.

“To mitigate the decline, milk powders are imported to bridge the gap and reduce the overall cost of milk. Milk supply base however remains strong,” he said.

Mandiwanza said consolidation of operations is progressing as planned and manning levels reduced by 10% from December 2016.

According to the CE, rationalisation costs incurred to date are at $866k against a budget of $1 million but actual costs are not expected to exceed budget.

Dairibord expect significant economic headwinds going forward, driven by projected weak economic performance, low disposable incomes and inflation driving cost of inputs upwards.

Continued challenges in accessing foreign currency will continue but Group performance will be underpinned by sustained benefits of SI64 and a good agriculture season and improved mining sector performance.

At the AGM, directors’ fees were approved at $167,811 and auditors’ fees at $126,875.

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