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DAIRIBORD Holdings Zimbabwe’ new products and line extensions boosted its sales volumes for the year ended 31 December 2014 and is targeting a four percent growth for the year to December 2015.

Group chief executive officer, Antony Mandiwanzira, said the group was now well positioned to drive growth despite the current depressed environment.

“Our new products and line extensions helped boost the group’s sales volumes for the year ended 31 December 2014,” he said.

Mandiwanza said the average selling price per litre of milk declined eight percent to US$1,41 from US$1,53 in the previous comparative year, resulting in revenue marginally declining by one percent to US$99 million from US$100 million in 2013.

He said the mismatch between the growth in volumes sold, and revenue generated during the period under review was an outcome of price adjustments to retain competitiveness, as well as a change in the product mix affected mainly by the growth in beverages and a decline in foods.

He said the key pillars for 2015 would be milk supply, investments and cost reduction.

This year Dairibord is targeting about 500 heifers which would add 200 000 litres a month to the milk supply. The group is also planning leveraging on the investments made in 2014 to support both domestic and export markets. The company is also looking at marginal pricing for exports in the current financial year.

“Under cost reduction, we will continue to deal with issues of effective procurement in order to benefit from the decline in commodity prices (milk powders, sugar, plastic packaging and fuel). We will continue the rationalisation around the integration of marketing and engineering functions,” Mandiwanza said.

The group is this year targeting a two percent growth on raw milk intake, eight percent volumes growth, four percent revenue growth, an operating profit margin of four percent and US$10 million in Capex.

Investments in Pfuko-Udiwo Maheu and Aqualite bottled water increased the contribution of beverages to revenue from 30 percent in 2013 to 31 percent during the period under review, while the contribution foods declined from 35 percent to 31 percent.

“The decline in the contribution of foods was on account of production disruptions during the commissioning of the new ice cream equipment,” he said.

Revenue streams were evenly spread across the portfolio, with liquid milks contributing 37 percent against 35 percent, foods 31 percent from 35 percent, beverages 31 percent versus 28 percent and logistics were stable at one percent. Exports contributed two percent to revenue.

The group said it made “strategic investments worth US$,9 million” during the year to address efficiencies, quality consistency, constrained capacity and new product offering and line extensions.

Mandiwanza said group raw milk intake declined two percent, due to a 20 percent decrease in Malawi as persistent quality challenges continued to negatively impact milk intake volumes for Dairibord Malawi.

Source : Financial Gazette