Dairibord completes the rationalisation programme

DZLH has completed the process of rationalisation and the group resumed normal production in April, group CEO Anthony Mandiwanza told the AGM this morning.
 
"The rationalisation programme which we reported at the time we announced our results centred on the need to rationalise plant and equipment..... We anticipated completing that process in the first quarter and I'm pleased to say we've actually completed the exercise," he said.
 
Mandiwanza added that net savings of $1 million per annum remain as expected.
 
Commenting on milk supply development, he noted that the programme to import heifers is on course and it will help the group to build the milk supply base.
 
 "We hope that through this initiative it will contribute nearly 10% to our milk supply in 2013," said Mandiwanza.
 
On Dairibord Malawi, he said the key issue remains on the need to export given the foreign currency constraints in the country.
 
"In Q1 the exports were 33% above Q1 last year which is quite useful in mitigating foreign currency constraints.
 
"Last year Q1 exports were 11% of turnover and this year Q1 is 20%," he said.
 
He highlighted that they unveiled the capital expenditure programme where certain equipment was successfully commissioned.
 
Looking at the 1Q13 performance in Zimbabwe, Mandiwanza said there has been limited product supply due to the relocation of equipment under the rationalisation programme.
 
Mandiwanza added that another challenge was increased costs due to the rationalisation process, "particularly on staff and equipment relocation."
 
Furthermore he bemoaned erratic supply and high cost of utilities except for areas where they have "invested in boreholes, back-up facilities particularly at Harare Dairy."
 
"The issue of liquidity…it's becoming excruciating in the business. In this quarter, manufacturing sector in particular has been experiencing the serious impact it was having on demand and the ability of people to pay on services rendered."
 
The group's 1Q13 performance in Malawi, as pointed out by Mandiwanza was hindered by intensified electricity load shedding impacting on production volumes.
 
The purchasing power in Malawi diminished because of the depreciation of the Kwacha thus presenting a challenge to the group's sales.
 
"There are strategies which we are deploying to address issues of foreign currency availability in Malawi," Mandiwanza said.
 
Commenting on the revenue, he said they are just on the same level at $24.295 million in 1Q13 against $24.226 million in 1Q12.
 
The volumes in litres decreased by a modest 1% from 16.250 million in the prior period to 16.046 million. Meanwhile, raw milk volumes slightly increased by 1% to 6.622 million versus 6.582 million recorded in the same period last year.
 
Under the operating environment in Zimbabwe he noted that the group is facing challenges such as limited milk supply and intense competition from the imports.
 
In Malawi, Mandiwanza highlighted that the issue of foreign currency remains a problem.
 
Giving the outlook he said; "We believe at a company level that the revenues and volumes for Q2 will be better than Q1 driven by initiatives that will deal with the supply side. The profitability overall in the first half will be affected by the rationalisation programme."
 
The group's directors were re-appointed and fees of $83 000 approved while auditors Ernst and Young were re-elected with remuneration of $271 439 also approved.