Zimbabwe | ZSE

Despite consumer pockets still being somewhat strained within the period, the notably more stable operating environment underpinned a rebound in volumes of 25% to 264,000 tonnes h/h. Volumes for the flour division increased by 56% albeit off a low base, after two consecutive periods in the red with growth being experienced both in the baker’s and prepack flour segments. Maize meal volumes were weak at a 23% decline relative to the prior period despite expectations of strong demand due to the drought. The dip in maize volumes was credited to market adjustments that took place following the conclusion of the subsidy program, as well as intense competition from imported maize meal.

The operating environment eased as COVID-19 induced restrictions were relaxed and inflation declined giving rise to a relatively stable local currency. With the stabilising currency, TV Sales & Home re-introduced credit sales allowing the company to defend market share and grow volumes (debtors’ book grew 130% y/y). TV Sales & Home volumes were up 40%; sales were also driven by growth in the store network. Equity accounted earnings mainly comprised of earnings from Restapedic Bedding (grew 231.29% y/y).

Influenced by a relatively stable macro-environment, volumes in the majority of Innscor’s operating units closed the period in positive territory. For the Mill-bake segment, the Bakery division experienced a 26% increase in volumes as flour availability improved, volumes however are still trending below historical norms. Volumes at National Foods yielded a 25% uptick to 264,000 mt owing to improvements in the trading environment whilst Profeeds recorded a 18% improvement in feed volumes, with the segment focusing on diversification of its operations.

The Global economy is expected to expand by 4% in 2021 despite delays in COVID-19 vaccines distribution, while Sub-Saharan Africa GDP is expected to close the year at 3.1%. Governments and central banks are likely to maintain stimulus packages and different monetary and fiscal policy measures which include reducing interest rates and purchasing assets to inject liquidity into the financial system. Debt is expected to keep rising for most countries. 

The Group registered strong revenue growth albeit a harsh macro-economic environment characterized by hyperinflation, high interest rates, tight liquidity, and local currency depreciation. However, the Group was not significantly affected by COVID-19 lockdown measures owing to its classification as an essential business. Resultantly, maize seed sales volumes for the period went up 100% while wheat seed sales volumes registered a 10% increase.

The Group registered robust revenue growth in the period under review on the back of early seed deliveries to customers in Malawi and Zambia, exports from Kenya to Rwanda and a strong demand in Nigeria. While the operating environment was unconducive for business for most entities due to the unprecedented COVID-19 pandemic, the Group’s operations in its multiple jurisdictions were not significantly impacted owing to its classification as an essential business. As a matter of fact, the pandemic drove the increase in the Group’s maize seed sales volumes and revenue as food security became a priority on the agenda of most countries, resulting in an unusually high early season demand for summer seeds.