Innscor plans new investments…says buoyed by Govt economic reforms

INNSCOR Africa Limited says it has approved US$70 million earmarked for various planned investments on the back of improved pro-business economic policies being implemented by the Government.

Under the Second Republic led by President Mnangagwa, the Government has declared that “Zimbabwe is open for business” and has been implementing various economic reforms aimed at transforming the economy and attracting investments.

This has seen creation of the much-needed macro-economic stability through the Transitional Stabilisation Programme, which ended last December. Monetary authorities have also introduced the weekly Foreign Currency Auction Trading System that has stabilised prices and the exchange rate on the formal market.

In a financial statement accompanying results for the six months ended 31 December 2020, Innscor said the reduced level of inflation experienced during the period under review has enabled a robust trading environment despite Covid-19.

“Government is to be applauded in the various policy changes it has initiated to enable a stable and more market-oriented trading environment, although caution must be added that it is imperative that any remaining market distortions be removed in order for the country to achieve meaningful long-term, sustainable success in its economic recovery,” said Innscor.

“It is because of these encouraging signs, that the group has approved an investment pipeline of US$70 million covering ongoing business optimisation initiatives, as well as the further expansion within existing business units.”

The diversified group said the projects, which would occur over the next 18 months, were in various stages of implementation and will enhance product quality, improve efficiency and significantly increase production capacity.

Innscor said the planned projects span its milling, baking, protein, packaging and beverage categories while investment opportunities into new, adjacent categories and products will also continue to be assessed.

“Business models are now showing signs of normalising margins, but also increased overhead costs. Our management teams will continue to adapt their operating models according to the current environment, this includes balancing volume objectives with appropriate return levels, carefully managing the overhead cost profile while also ensuring balance sheet value remains protected,” said the group.

It said it would continue to work with its financial institution partners to optimise the quantum and cost of debt deployed across all its operations to facilitate the necessary pipelines of inventory that are required to be in place, especially given prevailing disruptions to the global supply chain.

During the period under review, Innscor delivered a 774 percent growth in revenue over the comparative period to $25,342 billion. This was driven by strong volume performance across most of the company’s units, the removal of subsidised pricing on certain core product categories, and pricing policies that were implemented to secure inventory replacement.

Gross margin percentages continued to approach more normalised levels on the back of reduced inflation-lag, and overall gross margin growth at 590 percent over the comparative period was, therefore, lower than revenue growth. Operating expenditure increased by 643 percent over the comparative period as a result of volume increases and following escalations in certain of the cost buckets. Similar to gross margin, the group said operating profit percentages also showed a return to more normal levels as inflation-induced distortions began to dissipate.

An overall operating profit growth of $6,165 billion was recorded for the period under review, being 546 percent above the comparative period. 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.

The net interest charge for the period under review came in at $0,425 billion, and was affected by significantly higher local borrowing rates. Innscor’s associate operations continued to contribute positively to the overall group result and delivered a pleasing increase in earnings against the comparative period.

“Consolidated profit before tax for the period at $7 billion was 476 ahead of the comparative period, and percent overall headline earnings per share recorded a similar growth trajectory, coming in at 619,76 cents.”. – chronicle.cl.zw