Innscor reports good performance in all business portfolios

INNSCOR Africa Limited posted a $48,6 million profit after tax in the full-year ended June 2018 from $34,4 million in prior period, as all its business portfolios reported good performance.

The group has three segments such as Mill-Bake, Protein (Colcom and Irvines) and other light manufacturing and services (Probrands, Natpak and Capri).

During the review period, the group posted revenue of $631,2 million, a 9% increase from $580,3 million on the comparative year.

The company said second-half revenues were aided by improved day-old chick supply, which had previously been hit hard by an Avian Influenza epidemic, and a small pricing increase awarded in the bread category in the final quarter of the year.

An improved product mix, favourable raw materials position and continued tight control in operating costs resulted in operating profit growing by 18% over the comparative year to $77,1 million from $65,5 million.

"An improved performance was noted in the second half of the year where revenue grew 21% on the comparative period a result driven by increased volumes across most categories and improved product mix," group chairman Addington Chinake said.

Profit before tax gained 51% to $62,8 million from $41,6 in the prior period.

Total assets grew to $565,1 million from $472,9 million last year, whereas total liabilities ballooned to $243,5 million from $187,4 million.

The mill-bake division, which is basically the bakery division, recorded growth of 12% in loaf volumes over the comparative year, translating to a similar growth in revenue.

"Volumes were driven largely by a flat selling price in the face of significant price inflation in other competing alternative and substitute products. A small pricing adjustment awarded in the final quarter of the year under review did assist somewhat in improving the business model, but the overall operating profit was still lower than the comparative year despite higher volumes," said Chinake.

National Foods delivered 543 000 metric tonnes during the year under review, an increase of 7% over the comparative year. However, lower average selling prices resulted in lower revenue growth of 3% and operating profit levels were similar to the comparative year.

Profit before tax for Pure Oil grew 23% compared to the same period last year.

An improved performance was noted in the maize and FMCG divisions, whilst the stockfeeds division started to recover in the second half of the financial year as day-old chick supply improved.

The company reported that its position with its foreign supplier of wheat deteriorated significantly over the year. About $37,5 million was still outstanding by the end of the year under review.

Profeeds, an associate company of the group, recorded a 6% decline in feed volumes on the prior year. This was largely a result of lower day-old chick supply following the outbreak of Avian Influenza.

In the protein segment, Colcom division comprising Triple C, ColcomFoods, Texas Chicken and Associated Meat Packers increased overall volumes by 2% on the comparative period.

"A 4% decline in pork and beef volumes were offset by a 22% growth in pies and a 14% growth in chicken volumes," Chinake said.

"A 31% growth in operating profit arose mainly from improved product mix, efficiencies arising from the new Zimnyama beef abattoir established during the year, a restructuring of the pie operators, the divisionalisation of the business and economies arising from increased processed product volumes."

According to the group, volumes at Irvine's were severely impacted by the effects of the Avian Influenza epidemic, which occurred at the end of the financial year. Table egg volumes were 47% below those recorded in the comparative year, whilst day-old chick sales were 10% down compared to the same period last year.

The light manufacturing and services segment, comprising mainly of non-controlling interests in Probrands, Probottlers, Prodairy, Natpak and Capri, recorded a 57% increase.

Probrands volumes were driven by good growth in the down packing operation.

At Probottlers, volumes grew by 23% on the comparative year, with strong growth in the cordials category driving revenue growth by 32% over the same period.

Nampak volumes grew by 45% over the comparative year, driven largely by increased utilisation of new flexible packaging lines. Capri volumes remain stagnant.

The company said it would add another Maheu line to its Prodairy division during the first quarter of the new financial year.