Listed milk processor, Dairibord Holdings posted a 28% rise in revenue to RTGS$126.4 million for the year to December 31, 2018, which was largely driven by growth in liquid milk.
Volumes sold from continuing operations increased by 3% largely driven by liquid milks which benefited from increased raw milk intake.
Liquid Milks volumes grew by 9% while Beverages recorded a 2% increase. Foods decreased by 11%.
Also contributing to the revenue increase were selling price adjustments implemented during the year under review.
Notwithstanding the volumes growth, the company was still incapable of meeting local demand and instead focused on supplying regional markets.
“The business increased its focus on exports to supplement the company’s import requirements as traditional sources of foreign currency were declining. The focus on exports resulted in export revenue growth of 67% to $1.7 million. However, this level of performance still falls below the company’s import bill,” said management.
Dairibord’s operating profit from continuing operations increased to $10 million, a growth of 119% above prior year.
Profit after tax amounted to $6.4 million, an increase of 230% above prior year.
Operating profit margin was stronger at 8% up from 5% achieved in 2017.
Management said the company’s profitability of the company was impacted by several factors, namely: a 31% increase in cost of sales, driven by increase in price of materials; a 1% decline in non-manufacturing overheads due to cost containment measures implemented during the restructuring process, and no restructuring costs during the year compared to $0, 8 million incurred in 2017.
The group’s net cash generated from operations increased by 48% to $9.229 million on account of improved operating performance.
“Growth in cash flows was subdued by significant investment in inventories to mitigate value erosion from rising inflation. The business closed the year with foreign obligations of USD$3.7 million,” said management.
The firm declared a dividend of RTGS$0.007 per share for the year ended.
Analysts at Akribos Research Services have maintained a positive outlook for the company.
“Despite headwinds in the environment that Dairibord Holdings operates in, the company’s long -term prospects remain fairly attractive. The opening up of the dairy market ended Dairbord’s monoploy, but the group’s well-trusted brands have held up (UHT milk market share increased to 42% from 32% during the year),” they said.
“The company’s investments in local milk production will go a long way in reducing dependence on imported milk powder (national milk production for 2018 at circa 75,000litres, falls short of the national requirement of c100,000litres).”