DIVERSIFIED group, Innscor Africa Limited performance in the year ended June 30, 2021 largely tracked an improved economic environment that is characterised by increased demand of products.
The group’s operations span across the key sectors of the economy such as the agro-industrial, manufacturing, fast food services, distribution and retailing of household commodities and fresh produce.
During the year ended June 30, 2021, the Group registered excellent volume recoveries across all business units, driven by firmer demand, allowing for a trading-oriented focus to be adopted within all operations.
“An above normal 2020/21 rainfall season also contributed to the general economic improvement, as the country emerged from an extended period of drought, giving
rise to increased production and supply of key local raw materials such as maize and wheat.
“The stable operating environment also gave rise to various corrections within the real cost base of our businesses.
“In addition to the persistently high cost of debt, pricing corrections to the fuel, power, maintenance and human capital cost lines impacted the overhead base whilst gross margin levels approached more normalised levels, as inflation-induced distortions dissipated,” the group noted.
The Group posted 406 percent growth in revenue to $56,48 billion during the year, and this was achieved on the back of volume growth across all businesses as the introduction of new products, increased capacity utilisation in existing and new categories, access to a growing informal market and a market sensitive pricing strategy all aligned to provide a pleasing result.
According to the group, the year under review saw an encouraging improvement across the operating environment, supported by progressive monetary and fiscal policies such as the introduction of the foreign currency auction system and multi-currency platforms, providing convenience to the consumer.
As a result, a sustained reduction in inflation was experienced as pricing models were able to be set with more certainty. Market sentiment was generally positive, with a distinct improvement in consumer confidence contributing to firm aggregate demand, despite the backdrop of the on-going Covid-19 global pandemic.
“While the economic outlook is generally optimistic, ongoing economic stability will very much depend upon policy consistency, meaningful efforts to stabilise the local currency, and the removal of arbitrage opportunities,” the group noted.
Innscor Africa operates through segments that include the mill-bake, protein, light manufacturing services, and head office services.
The mill-bake segment focuses on bakery division, national foods, and non-controlling interest in profeeds.
The protein segment comprises Colcom, Irvine’s, Associated Meat Packers, Texas meat and Texas chicken.
The light manufacturing segment involves the production of stock-feeds, edible oils, bakers’ fats, sale of other general household products; the production, processing and marketing of pork and related food products, the manufacture and retail of household goods and appliances, the production of chicken, table eggs and day old chicks, the down-packaging and manufacture of grocery products such as rice, dairy, candles and beverages; and the production of variety of bags for packaging, which include open mouth bags, general purpose bags and carrier bags.
During the period under review, in the mill-bake segment, volumes within the bakery division improved by 36 percent against the comparative year and were enabled by a reliable and consistent supply of key raw materials, coupled with cost stability, and which allowed for pricing consistency.
“The division progressed well in rebuilding the volume base, and this will be supported in the coming period through further plant automations and upgrades across all manufacturing facilities, enabling capacity, and quality and efficiency improvements.”
At National Foods, volume performance on an overall basis closed 15 percent ahead of the comparative year, with strong growth realised within the flour, stockfeeds, groceries and snacks divisions.
The flour milling division recorded volume growth of 43 percent over the comparative year, supported by strong consumer demand, especially within the pre-pack category.
The group has lined up a project to upgrade the Bulawayo site with a new state of the art flour mill and this line is expected to be commissioned during the latter part of the 2022 calendar year, enabling significant capacity and product quality improvements.
The stockfeeds division delivered a 33 percent increase in volumes compared to prior year, with the stronger local demand for protein products, and increased demand from small-scale poultry production, being key determinants of the overall performance.
Volumes within the grocery division increased 74 percent compared to the comparative year; this substantial growth was achieved largely in the rice and salt categories enhanced by competitive pricing.
“The snacks and treats division continued to deliver strong volume growth showing a 57 percent increase against the comparative year and the division continues to innovate and deepen its product offering.”
In the protein division, the Colcom division, comprising Triple C Pigs and Colcom Foods, delivered a 34 percent growth in aggregate volumes against the comparative year, with processed product volumes increasing by 54 percent and fresh product volumes increasing by 15 percent.
Irvine’s delivered pleasing growth across all three of its core categories, with table egg volumes closing at record levels, and being 8 percent ahead of the comparative year as additional production capacity was brought online.
Frozen chicken volumes saw a 21 percent improvement compared to prior year, while day-old-chick volumes increased 29 percent over the same period as demand across the small-scale poultry market continued to recover.
At AMP, volume growth of 6 percent above the comparative year was relatively muted, and impacted by Covid-19 lockdown restrictions which significantly reduced trading hours.
In the other light manufacturing and services, Natpak continued with its positive growth trajectory, delivering overall volumes which were 20 percent ahead of the comparative year.
The rigids division recorded a 32 percent increase in volumes against the comparative year, on the back of firmer demand, increased capacity utilisation, and increased productivity across its core customer base.