Business / Companies
Zimbabwe Dairibord posted a solid set of interim results
16 Aug 2011 at 07:40hrs | Views
Dairibord posted a solid set of results for the interim period to 30 June 2011, showing a 27% growth in total sales volumes. The volume growth was buoyed by growth in liquid milks (+40%), foods (+42%) and beverages (+14%).
This translated to a 35.4% growth in revenues to $42.5 million supported by the higher realizations from strong growth in high value foods and liquid milks. Beverages contributed 45% to sales volumes, liquid milks 39% and foods 16%. The strong volume recovery was supported by investments in machinery, brands and capacity. Margins were squeezed on firm international commodity prices a strengthening of the rand and Euro resulting in EBITDA margins easing 217bps to 12.1%. Adjusted PBT (excluding once off gain from the disposal of Interfresh of $0.8 million) increased 12.1% to $3.3 million. Attributable earnings decreased by 22.6% to US$ 3.0m further impacted by the increase in the tax rate from 23.9% to 30.2%.
Cash flows improved although they were strained due to high working capital requirements and capex ($2 million). Net gearing remained manageable at 13.4%, although this was a slight deterioration from 10.6%.
Total borrowings closed the period at $5.8 million at an average cost of 10.2%.
The volume growth is expected to accelerate in the second half driven by the new installed capacity and improving disposal incomes. Zimbabwe's monthly national demand for raw milk is estimated at over 6.0m litres against current production of approximately 4.2 million litres. Margins should be enhanced on improved efficiencies and reduced maintenance costs. Per capita consumption of approximately 8 litres pa (peak of 25 litres in 1990) is low against regional average of approximately 35 litres, suggesting tremendous growth potential off a low base. Dairibord commands a significant market share on the local market and owns solid strong brands.
In a research note, Nontando Zunga of Imara Stockbrokers said they maintain their BUY recommendation to the stock.
This translated to a 35.4% growth in revenues to $42.5 million supported by the higher realizations from strong growth in high value foods and liquid milks. Beverages contributed 45% to sales volumes, liquid milks 39% and foods 16%. The strong volume recovery was supported by investments in machinery, brands and capacity. Margins were squeezed on firm international commodity prices a strengthening of the rand and Euro resulting in EBITDA margins easing 217bps to 12.1%. Adjusted PBT (excluding once off gain from the disposal of Interfresh of $0.8 million) increased 12.1% to $3.3 million. Attributable earnings decreased by 22.6% to US$ 3.0m further impacted by the increase in the tax rate from 23.9% to 30.2%.
Cash flows improved although they were strained due to high working capital requirements and capex ($2 million). Net gearing remained manageable at 13.4%, although this was a slight deterioration from 10.6%.
Total borrowings closed the period at $5.8 million at an average cost of 10.2%.
The volume growth is expected to accelerate in the second half driven by the new installed capacity and improving disposal incomes. Zimbabwe's monthly national demand for raw milk is estimated at over 6.0m litres against current production of approximately 4.2 million litres. Margins should be enhanced on improved efficiencies and reduced maintenance costs. Per capita consumption of approximately 8 litres pa (peak of 25 litres in 1990) is low against regional average of approximately 35 litres, suggesting tremendous growth potential off a low base. Dairibord commands a significant market share on the local market and owns solid strong brands.
In a research note, Nontando Zunga of Imara Stockbrokers said they maintain their BUY recommendation to the stock.
Source - Imara Stockbrokers
