HARARE, ZIMBABWE — National Foods Holding Limited reported on Sept. 11 that earnings for the year ended in June were $16,783,000 million, a 17% increase from the $13,939,000 reported in 2013.

Earnings per share were $24.54 compared to $20.38 in the prior year. Revenue increased 11% to $343,518,000 in 2014 from $309,320,000 in the previous year.

Flour milling volumes increased by 2% from the previous year, while revenue decreased 1% due to a lower realization per tonne of wheat sold. Profitability dropped by 13%.

“Spot traders of flour have the ability to import cheap product into Zimbabwe during periods of international price volatility whereas National Foods is committed to a five-month pipeline of pre-priced wheat and hence must compromise margin in order to respond to short-term price movements,” said Chairman Todd Moyo.

Maize milling experienced strong results due to a 19% increase in the volume sold. The volume increased combined with a 4% increase in average realization per tonne resulted in revenue growth of 33%, National Foods said.

“Our demand planning tools enabled us to activate sufficient procurement plans and enough logistical support to timeously import our maize requirements,” Moyo said. “We were therefore able to effectively supply a market that was short of product. Furthermore, we initiated a ‘one price nationwide’ policy that was very well received.”

Stockfeed sales increase 6% despite increasing competition and a loss in market share in the small-scale poultry sector. The sector saw revenue grow 3%, but there was no improvement in profitability.
The downward trend in maize and soy prices toward the end of the reporting period allowed further price reductions. The Stockfeeds business will need to collaborate with more parts of the protein value chain to mitigate the pending impact of the primary commercial producers investing in their own feed manufacturing facilities, National Foods said.

Volumes sold of rice, salt, small grains, pasta and spreads were collectively 22% higher than previous year while baked beans' volumes were down 31%. The business contributed marginally to overall group profits, but plays a crucial role in contributing to the group's fixed costs, in particular the distribution footprint.

Rice volumes grew 36% while margins grew to 22% driven by improved procurement and some distribution efficiencies.

National Foods said it will continue to invest in modernizing its core operation platform. This year it invested $3.6 million on completed capital projects with an additional $3.2 million of approved capital expenditure projects that will roll over into the next financial year.

It operated eight of 11 factories for the year, and opened its Mutare maize milling plant for five months.

“We met market demand and were able to achieve logistical efficiencies through our ability to manufacture product at different geographic locations in response to localized market demand,” said Moyo.

It completed the commissioning of a new pelleting machine and an extruder, and installed moisture addition equipment to reduce moisture loss and homogenize product quality. Following extensive research, National Foods has decided to renovate the existing flour milling sites in Harare and Bulawayo in preference to establishing greenfield sites.

Further upgrades to downpacking machines for the FMCG business were made and this has elevated manufacturing efficiency to regional benchmarks, Moyo said. Integrated software weighbridge management systems were installed at all sites to enhance controls of both in and outbound product.