FOOD processing company National Foods Holdings Limited recorded a 9% decline in sales volumes to 275 000 metric tonnes (mt) weighed down by the poor performance of various units.
Group non-executive chairperson Todd Moyo attributed the decrease to the harsh trading environment of the period under review.
“From a trading perspective, the period was a challenging one for the group, impacted mainly by global wheat price increases which significantly dampened demand in the flour and flour-related categories and various market adjustments following the drastic but necessary policy interventions which occurred in May and June 2022,” said Moyo.
In the flour unit, volumes decreased by 20% due to the increase in the global price of wheat. The import wheat price was US$600 per metric tonne above the normal levels of US$400-US$450/mt, which resulted in bread prices rising.
“This led to reduced bread consumption and bread was substituted by favourably priced alternative starches such as rice,” he said.
Also performing negatively was the maize milling unit whose volumes declined by 6%. The stockfeeds unit and the biscuit unit volumes dropped by 4% and 15% respectively.
In addition, the traded goods unit fell heavily by 44% during the period under review compared to the preceding year, largely because of the performance of the pasta category.
“The pasta category performed poorly as a result of product supply challenges following an embargo on exports of pasta from Egypt,” Moyo said.
In spite of the lower volumes, Moyo said the Group revenue increased by 8% to US$167 million, a reflection of higher global commodity prices which affected the cost of all of the major raw materials with the exception of rice.
Meanwhile, the cereal unit, snacks unit and the downpacked unit had increased volume sales of 42%, 18% and 12% respectively.
The group also recorded a 37% in net profit for the period under review despite 5% growth in operational expenditure, as many cost lines increased in real terms with the increased use of US dollars in the economy.
“EBITDA [earnings before interest, taxes, depreciation and amortisation] US$ 13.96 million was 16% below last year, with the result at PBT level being heavily impacted by net interest cost of US$3.3 million incurred on ZWL debt in the first quarter,” he said.
“Interest rates were increased to 200% per annum for the quarter, and the high costs were incurred as we took measures to swap our expensive ZWL debt for US$ debt,” he added.
National Foods successfully listed on the Victoria Falls Exchange on 23 December 2022. Like the other companies that migrated from the Zimbabwe Stock Exchange, the group listed on VFEX to gain US dollar capital and add shareholder value.