Dairibord trims foreign liabilities
DIVERSIFIED food processing firm, Dairibord Holdings Limited, has lowered its foreign liabilities by 34 percent to US$771 000 in the quarter ended 30 September 2020 and seeks to further trim them to ensure viability.
During the period under review, the group was focused on ensuring the viability of suppliers through various support initiatives including competitive prices to sustain long-term milk supply growth. In its latest trading update, Dairibord said the drive to generate forex revenue and contributing towards foreign currency requirements was bearing fruit evidenced by year to date foreign currency revenue growth of 50 percent from 2019.
“Foreign currency liabilities closed the period at US$0,771 million (including a long-term loan of US$0,302 million) down 34 percent from US$1,161 million at the end of June 2020,” said the company.
“The short-term liabilities were partly covered by foreign currency cash balances and expected receipts of US$0,312 million.”
As a result, the group remains sufficiently liquid with a current ratio of 1,55. Dairibord said focus on optimising the cash management cycle saw the cash to credit ratio in September improve to 36:64 from 18:82 in December 2019.
“Borrowings as at 30 September 2020 were ZWL$172,509 million, up 504 percent from 31 December 2019. With a gearing ratio of 14 percent, there is an opportunity for the company to leverage the balance sheet for growth,” said Dairibord.
During the period output grew on the back of improved supply of raw and packaging material. However, materials, labour, electricity, fuel and water costs continued to escalate, it said.
“Demand significantly improved in the third quarter with sales volumes growing 32 percent ahead of second quarter.
“Growth was recorded across all product categories with liquid milks, foods and beverages growing by 15 percent, 74 percent and 50 percent respectively.
“Volumes for the quarter were 10 percent below the third quarter of 2019 showing a recovery compared to the 46 percent decline recorded in the second quarter of 2020 versus second quarter of 2019,” said the company.
While cumulative sales volumes remained below 2019, at 26 percent down, Dairibord said the trajectory shows a recovery from the 32 percent decline recorded in the first half. Revenue for the quarter in inflation adjusted terms was 43 percent (155 percent in historical terms) above prior quarter and eight percent (810 percent in historical terms) above the third quarter of 2019.
“Year to date revenue was eight percent below the same period in 2019. The cumulative reduction is on account of depressed half-year performance,” said the company.
Year to date operating margins increased to eight percent (10 percent in historical terms) compared to six percent in 2019. On the outlook, Dairibord said the improved performance achieved in the quarter under review was expected to continue up to the end of year as the local and regional economies show signs of recovery.
“The business is geared to exploit opportunities presented in a more stable operating environment by mitigating supply chain disruptions and taking full advantage of weather-induced demand,” it said.
“The business will continue to implement Covid-19 risk mitigation measures as a priority to protect the interests of our stakeholders.”-chronicle.co.zw
