The first quarter was characterised by high inflation, exchange rate volatility and local currency depreciation. The introduction of the Zimbabwe Gold (ZiG) currency in April however brought about a more predictable market environment in the second quarter. However, Dairibord faced liquidity constraints during the period owing to the stringent monetary policy framework. Moreover, intermittent availability of power and water exerted upwards pressure on production costs and impeded consistent output. According to the Dairy Services Unit of the Ministry of Agriculture, Lands, Fisheries and Rural Development, national milk production output increased by 22% y/y to 55.1mn litres for the period under review. Dairibord retained its position as the processor with the highest raw milk intake at 19.97mn litres, which was 40% above the prior year, representing 36% of milk intake by processors. The Group solidified its market share from 28% in 2023 to 36% in the current period. Volumes performance was 2% ahead the prior comparative period at 52.41mn litres. Liquid milks registered substantial growth of 21% y/y owing to augmented raw milk supply and clawing of market share across the Chimombe, Steri, Lacto and Supermilk product lines. Foods gained 25% volumes on the back of exceptional performance of Yummy yoghurt and ice creams, alongside improved product availability. Beverages on the other hand contracted by 8% as the Pfuko brand underperformed due to price adjustments and the scarcity of small change. The Group strengthened its export position by 59%, with exports contributing 9% of overall sales. Revenue for the period firmed 12.87% to US$54.71mn from US$48.47mn in 1H23 driven by volumes growth and strategic price adjustments. Seventy-six percent of the total sales were denominated in US$, an improvement from 64% during the comparable period. Changes in the tax regime, exchange rate-induced pricing distortions and imported inflation escalated costs and exerted pressure on working capital. Consequently, EBITDA declined 53.32% to US$5.09mn [1H23: US$10.91mn] with EBITDA margin falling to 9.31% from 22.50%. However, stripping out non-cash items, the Group’s normalised EBITDA margin stood at 7.9% The Group turned around its US$0.74mn loss from the prior period to close the year with a PAT of US$3.06mnn. The Group’s operational cashflows were hamstrung by investments in inventory, advance supplier payments and delayed customer settlements. Short term borrowings were therefore utilised to fund shortfalls in working capital. Dairibord consequently closed the period with US$1.17mn in cash against US$5.18mn in debt. The board resolved not to declare a dividend for the period in order to reinvest in the business.
