DZL | Dairibord Holdings FY23 Earnings Update; Dairibord retains largest portion of market share

    The financial year remained difficult, with Dairibord operating under a complex and dynamic economic environment characterised by rapid devaluation of the Zimbabwe dollar, tight liquidity and unpredictable market conditions. Consumer buying power was suppressed owing to liquidity challenges in the economy. According to the Dairy Services Unit of the Ministry of Agriculture, Lands, Fisheries and Rural Development, national milk production output increased by 8.78% to 99.8mn litres in 2023 compared to the preceding year. Intake by processors also increased to 91.8mn from 82.5mn litres in 2022. Dairibord retained its position as the processor with the highest raw milk intake at 31.4mn litres, which was 10% above the prior year, representing 34% of milk intake by processors. Despite the volatile trading environment and a general downturn in consumer spending, the Group’s cumulative sales volume performance was ahead of the comparative period last year, with 11% growth to 108mn litres. Liquid milks registered 8% growth, whereas beverages maintained a consistent growth momentum with an 18% growth. Foods, however, declined by 21% owing to persistent challenges in the procurement of high- quality inputs, reduced demand for bulk ice creams due to power outages and heightened competition from cheaper imports in the condiments category. Historical revenue was 893% ahead of prior year at ZWL$452.94bn driven by the 11% sales growth and strategic price adjustments. Although inflation and price distortions exerted significant cost pressures on the business, EBITDA grew 968% y/y to ZWL$48.19bn, with EBITDA margin gaining to 10.64% from 9.89%. The rapid depreciation of the local currency during the year resulted in significant foreign exchange losses of ZWL$36.30bn [2022: ZWL$3.17bn] which weighed down on the operating performance. The Group however managed to close the year with a PAT of ZWL$13.57bn, 573% ahead of the prior year. Delays in lead times extended the working capital cycle, impacting on the Group’s cashflows. The Group closed the period with ZWL$11.09bn in cash against ZWL$36.21bn in debt. The board decided not to declare a dividend for the financial year in a bid to reinvest in the business.


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