By Alois Vinga
LISTED dairy products and milk processor, Dairibord Zimbabwe Limited’s (DZL) registered foreign currency sales increased 123 % on the strength of regulatory directives by the central bank which allowed the use of foreign currency for local transactions.
Last year, the Reserve Bank of Zimbabwe allowed members of the public to transact in US dollars using their free funds in line with Statutory Instrument 85 of 2020.
Presenting the group’s financial performance for the period ended December 31 2021, DZL chairman Josphat Sachikonye acknowledged the policy’s impact on the firm’s sales growth.
“Significant growth in domestic foreign currency sales was realized following the reintroduction of SI185 of 2020. Total foreign currency revenue increased by 123 % over 2019 and accounted for 13% of total inflation adjusted revenue,” he said.
Sachikonye said revenues generated coupled with proceeds from the auction market contributed towards meeting the import bill.
The business achieved an operating profit of $231 million, operating costs grew faster than revenue increasing by 10 % compared to 2019.
As a result, an operating profit margin of 4 % was attained, down from 8 % in the prior year.
However, during the period under review, the liquid raw milks category volumes declined by 9 % and 6 % respectively due to constraints in the importation of supplementary milk powders.
The company also attributed the declines to shortages of stockfeed because of the droughts in preceding years.
Sales volumes for the period were 12.5 % below 2019 as the performance was particularly affected by lacklustre outturn in the second quarter in which volumes dropped by 46 % year on year due to Covid-19 restrictions that impacted trading hours and sales channels.
Sachikonye said while there was recovery in sales in the second half, supply chain constraints limited the business ability to fully capitalise on demand.
The beverages category declined by 18% while the foods category which was the highest value and margins increased by 9 %over 2019.
The redesigning of the route to market saw a strong recovery in the fourth quarter which resulted in a 31 % volume growth over the same period in prior year.
Inflation adjusted revenue grew by 5% from prior year to $5.3 billion.