Zimbabwe | ZSE

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.

The year under review saw a fluid environment characterized by local currency exchange rate volatility. Policy interventions saw the introduction of the 200% key policy rate which exacerbated costs of ZWL debt and tighter money supply conditions. Demand was consequently impacted by the illiquid conditions with volumes slowing 3% y/y to 553,000 MT. Raw material costs remained elevated in the period on account of supply chain blockages from the Russia-Ukraine war. As such, average realised selling prices for National Foods were US$621 per ton compared to an average of US$494 per ton historically.

The operating environment remained challenging in the period under review characterized by a volatile currency and hyperinflation. Subsequent tightening of monetary conditions by authorities created local liquidity constraints for both business and consumer. Lower real disposable incomes also impacted demand resulting in volumes for BAT Zimbabwe sliding 15% y/y. However, optimal cigarette pricing strategies and revenue from cut-rag tobacco exports supported a revenue increase of 674% in historical terms from ZWL$4.79bn in 1H22 to ZWL$37.12bn in 1H23.

According to the Ministry of Agriculture’s Dairy Services Department, Zimbabwe’s 1H23 milk intake by processors rose 9.19% to 42.08mn litres from the prior year comparative period. Dairibord’s milk intake increased 16% in 1H23 and the Group retained its position as the processor with the highest milk intake at 14.23mn litres, representing 34% of the total intake by processors. Despite the adverse operating environment marked by severe inflationary pressures and depressed liquidity, the Group’s cumulative sales volume performance was ahead of the comparative period last year as total sales volumes for the period grew by 9%.

The operating environment remained challenging characterized by exchange rate volatility and hyperinflation. The multiplicity of exchange rates posed arbitrage challenges on both the supply and selling sides of the retail business. According to the Company, pricing dynamics have tilted consumers to favor the lesser-regulated informal sector. Consumer demand remained under pressure in the period as incomes were not moving in line with exchange rate movements.

The operating environment remained challenging characterized by a depreciating local currency and increasing inflation despite global inflation slowing down. Regardless, Dallaglio remained one of the top three gold producers in the country. Gold sales in HY23 closed the period at 1,080kgs versus 933kgs recorded in HY22. The volume growth of 16% was largely driven by increased plant throughput at Eureka mine. Consequently, a turnover of US$62.66mn was achieved under the mining business compared to US$51.72mn recorded in HY22, translating to an uptick of 21%. The positive performance was on the back of increased output aided by firmer gold prices. EBITDA for the mining business closed the period under review at US$11.66mn compared to US$19.93mn registered in HY22.