Business / Companies
Lobel's not leaving Bulawayo
23 Jun 2016 at 09:27hrs | Views
The country's oldest bread maker, Lobel's Bread, is not planning to shut down its operations in the second largest city of Bulawayo, contrary to speculation that it could join many other firms that have relocated to Harare.
The rumour-mill had been awash with speculation that the bread manufacturer was on the verge of shutting down its doors in Bulawayo. This had been fuelled by the closure of several of the company's retail outlets in the Central Business District (CBD) earlier this month.
Sindiso Masuku, the acting chief executive officer of Lobel's Bread, told the Financial Gazette's Companies & Markets that the speculation was "malicious" as the bread maker's Bulawayo business was profitable.
"At no time has Lobel's Bread ever considered dis-investing from Bulawayo. The company is actually enjoying good business in the City of Kings and is on an upward trajectory at the moment," he said.
Masuku said the proliferation of competition in the bread industry was not a threat to their business.
"It is not in the tradition of Lobel's Bread to run away from competition, because competition is good for the economy at large and for the consumer in particular," he said.
In 2013, the bread manufacturer installed a new equipment line at its plants in Harare and Bulawayo, as part of efforts to increase production. It is understood that its plant in Bulawayo is operating at 90 percent capacity.
Masuku said a decision by the company to focus solely on bread production had necessitated the closure of its retail shops in the CBD.
"Lobel's never had a confectionery unit along Jason Moyo Street, but operated a retail shop. The retail shop in question was shut down in order to consolidate operations and focus on our core business, which is bread production. The business does not need to continue competing with its retail partners," he said.
In existence for 59 years since 1957 and founded by the Lobel family in Bulawayo, the company was sold to a consortium of indigenous Zimbabweans in 2002 before expanding its operations with the opening of a 60 000 capacity bread plant in 2004.
Five local banks - FBC Bank, CBZ Bank, NMB Bank, Metbank and Capital Bank - who were owed a total of US$14 million by the bread maker, took over the company to settle their debts and save the firm from collapse. The consortium of bankers, through their investment arm Altiwave, invested US$4,5 million in plant refurbishment and new equipment acquisition.
Masuku said Lobel's debt had been "significantly reduced" in line with a scheme of arrangement and the company was on course to fulfil the obligations of the scheme, as and when they are due.
Lobel's Bread has 1 465 employees, with 932 workers based in Harare and 533 based in Bulawayo.
Meanwhile, National Bakers Association of Zimbabwe president, Givemore Mesoemvura, said bread production nationally had declined in the last three months, a sign that ongoing economic pressures had not spared bread makers.
"Our production capacity has come down to about 850 000 loaves per day from about one million loaves some three months ago. Some bakeries have also shut down and these are in the small to medium range and these have shut down due to the biting economic environment.
"For as long as things remain the way they are, characterised by cash shortages and companies closing down…we cannot see any growth in the future," he said.
Zimbabwe's three biggest bread makers are Lobel's Bread, Bakers Inn and Proton; they control among themselves about 70 percent of the market, with the rest shared between smaller manufacturers. Mesoemvura allayed fears that bread shortages loomed in the country as payments to suppliers of raw materials took long to be processed, owing to the cash challenges in the country's financial institutions. This has hamstrung imports of critical raw materials.
"We have been assured by the Reserve Bank of Zimbabwe that payments to suppliers would be made. We procure outside flour, bread premix among other raw materials and bread makers had for sometime not been able to pay suppliers on time."
The rumour-mill had been awash with speculation that the bread manufacturer was on the verge of shutting down its doors in Bulawayo. This had been fuelled by the closure of several of the company's retail outlets in the Central Business District (CBD) earlier this month.
Sindiso Masuku, the acting chief executive officer of Lobel's Bread, told the Financial Gazette's Companies & Markets that the speculation was "malicious" as the bread maker's Bulawayo business was profitable.
"At no time has Lobel's Bread ever considered dis-investing from Bulawayo. The company is actually enjoying good business in the City of Kings and is on an upward trajectory at the moment," he said.
Masuku said the proliferation of competition in the bread industry was not a threat to their business.
"It is not in the tradition of Lobel's Bread to run away from competition, because competition is good for the economy at large and for the consumer in particular," he said.
In 2013, the bread manufacturer installed a new equipment line at its plants in Harare and Bulawayo, as part of efforts to increase production. It is understood that its plant in Bulawayo is operating at 90 percent capacity.
Masuku said a decision by the company to focus solely on bread production had necessitated the closure of its retail shops in the CBD.
"Lobel's never had a confectionery unit along Jason Moyo Street, but operated a retail shop. The retail shop in question was shut down in order to consolidate operations and focus on our core business, which is bread production. The business does not need to continue competing with its retail partners," he said.
In existence for 59 years since 1957 and founded by the Lobel family in Bulawayo, the company was sold to a consortium of indigenous Zimbabweans in 2002 before expanding its operations with the opening of a 60 000 capacity bread plant in 2004.
Five local banks - FBC Bank, CBZ Bank, NMB Bank, Metbank and Capital Bank - who were owed a total of US$14 million by the bread maker, took over the company to settle their debts and save the firm from collapse. The consortium of bankers, through their investment arm Altiwave, invested US$4,5 million in plant refurbishment and new equipment acquisition.
Masuku said Lobel's debt had been "significantly reduced" in line with a scheme of arrangement and the company was on course to fulfil the obligations of the scheme, as and when they are due.
Lobel's Bread has 1 465 employees, with 932 workers based in Harare and 533 based in Bulawayo.
Meanwhile, National Bakers Association of Zimbabwe president, Givemore Mesoemvura, said bread production nationally had declined in the last three months, a sign that ongoing economic pressures had not spared bread makers.
"Our production capacity has come down to about 850 000 loaves per day from about one million loaves some three months ago. Some bakeries have also shut down and these are in the small to medium range and these have shut down due to the biting economic environment.
"For as long as things remain the way they are, characterised by cash shortages and companies closing down…we cannot see any growth in the future," he said.
Zimbabwe's three biggest bread makers are Lobel's Bread, Bakers Inn and Proton; they control among themselves about 70 percent of the market, with the rest shared between smaller manufacturers. Mesoemvura allayed fears that bread shortages loomed in the country as payments to suppliers of raw materials took long to be processed, owing to the cash challenges in the country's financial institutions. This has hamstrung imports of critical raw materials.
"We have been assured by the Reserve Bank of Zimbabwe that payments to suppliers would be made. We procure outside flour, bread premix among other raw materials and bread makers had for sometime not been able to pay suppliers on time."
Source - fingaz
