Innscor shells US$70m on expansion

ZIMBABWE Stock Exchange-listed blue-chip, Innscor Africa Limited, has injected about US$70 million to consolidate its expansion operations, according to the group's chairperson, Addington Chinake.

The empire, with interests in Bakers Inn, National Foods Limited and fridge manufacturer, Capri, in an annual report for the year ended June 30, 2021, said the short-term strategy was to build efficiencies and improve capacity utilisation across the organisation.

"The group remains hopeful that the positive trajectory over the past year will be sustained, and to this end, our management teams are currently executing our short-term investment pipeline of US$70 million," Chinake said.

"Investment initiatives covering ongoing business optimisation and expansion within existing business units are now at various stages of implementation and will continue to be phased in over the coming financial year.

"These exciting developments will result in significant increases in production capacity and efficiency improvements, as well as entry into new products and categories, with significant job opportunities being created."

The firm's inflation adjusted post-tax profits slowed by 26,5% to $4,39 billion during the period, from $7,42 billion previously, after inflationary pressures pushed up operating costs.

But analysts said recording a profit during a period of pandemic-inspired lockdowns demonstrated the group's capacity to navigate volatile market conditions.

"Inflation-induced distortions dissipated during the course of the year, and gross profit percentages were, therefore, lower in the current year as measured against the comparative year under the historical cost convention; this resulted in overall gross profit growth of 293% being lower than revenue growth," Chinake said.

"The group's financial income continued to be dominated by exchange gains, while fair value adjustments on biological assets were impacted by the convergence of market and book values.

"Fair value adjustments on listed equities were lower by 85% against the comparative year, indicative of the extreme levels of inflation that occurred during the 2020 financial year; this contrasted against the much lower inflation levels experienced in the current year.

"This has the effect of constraining historical cost earnings per share growth. The net interest charge for the year of $1,284 billion was a significant increase over the comparative year and was affected by higher-denominated loan values at higher interest rates."

Innscor recorded interest expenses of $1,61 billion for the period under review, from a 2020 comparative $1,03 billion, arising from lease finance charges and bank borrowings, in the form of overdrafts.

The interest expense also included short- and long-term loans as well as letters of credit based on the effective interest rate, the firm said.

"Revenue growth was achieved on the back of volume growth across all businesses as the introduction of new products, increased capacity utilisation in existing and new categories, access to a growing informal market and a market-sensitive pricing strategy all aligned to provide a pleasing result," Chinake said.

National Foods volumes closed 15% ahead of the comparative year, with strong growth realised within the flour, stockfeeds, groceries and snacks divisions.

The firm said its protein division, Irvines, recorded an 8% growth in egg volumes and 21% growth in chickens while day-old chick volumes increased by 29%.

Colcom delivered a 34% growth in aggregate volumes against the comparative year.