INN | Innscor Africa Limited FY23 Earnings Update; Group’s investment drive underpins volumes uplift

FY23 for Innscor Africa Limited was encompassed by a relatively stable environment in 1H23 on account of tight monetary conditions. 2H23, however saw resurgence of currency volatility and inflationary market conditions with pricing distortions and resultant arbitrages negatively impacting consumer demand and confidence in formal retail channels. Consumer demand however remained firm in the informal market supported by performances in the mining and agricultural primary sectors. Volumes under National Foods retreated 3% weighed down by the elevated prices of wheat and suspension of import duty on basic goods. Profeeds operated at full capacity delivering stockfeed volumes 9.5% ahead of comparative year on the back of sustained demand in the poultry category. Nutrimaster saw a 35% volumes growth underpinned by demand in the row-cropping, horticulture and tobacco segments. Under the protein segment, Colcom foods grew 8% with pig production at Triple C pigs growing 3%. The frozen chicken segment under Irvines continued to operate at capacity, whilst Table eggs and day-old chick categories grew at 14% and 7% respectively. The AMP group saw a volumes recovery of 13% with both chicken and beef categories contributing positively. The beverage and light manufacturing categories performed well with Prodairy volumes increasing 44% y/y and the Mafuro farm raw milk production increasing 8% y/y. Probottlers’ aggregate volumes increased 14% ahead of the comparative year, mainly driven by increased production capacity through the new “Fizzi” 500ml line whilst Natpak volumes grew 10% on capacity enhancements. The newly introduced Nyathi sorghum beer saw a positive uptake in the market. In terms of financials, Innscor saw a 14.7% increase in revenue to US$804.04mn. EBITDA margin however shrunk from 15.01% to 11.33% as the group moved to absorb some of the impact of raw material price increases and a dollarizing cost base which saw OPEX grow 16.6% y/y. The group saw exchange losses of US$16mn, from an exchange gain of US$0.22mn in FY22. Net interest expense for the group fell 22% to US$13.44mn, reflecting efforts to restructure borrowings in a high ZWL interest rate environment. Profit for the year was subsequently down 41% to US$37.84mn driven by lower margin efficiency. Cash generated in the period stood at US$112.07mn versus US$100.20mn in FY22, aiding with the capital expenditure of US$70mn. The board declared a final dividend of USc1.05 payable to all shareholders registered to the company by close of business on the 13th of October 2023. This brings the total dividend to USc2.65.


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