Innscor Africa pours US$56m for expansion

Diversified industrial group — Innscor Africa Limited — has poured US$56 million worth of investment for the financial year 2023, which will go towards various expansion programmes across the group.

This comes as the group continues with its ambitious programmes aimed at increasing capacity, production efficiencies and product quality — initiatives that started during the financial year 2021.

“The group embarked on an ambitious US$70 million investment programme in 2021, with this initiative having reached completion during the year, a further US$56 million of additional investment is planned for the forthcoming financial year.

“The 2023 financial year will see a considerable number of these projects being commissioned across the group, enabling production capacity increases, adding new product categories, significantly improving product quality and further enhancing production efficiencies; all enabled via the introduction of world-class technologies and plant automations,” said chairman Addington Chinake.

The bakery division is among the focus areas of investment. According to the group, an investment of US$25 million already underway for installation of a new world-class, fully automated manufacturing facility in Bulawayo. This facility is expected to be operational before the end of the 2022 calendar year, while further plant automation enhancements will follow in the Harare plant while a distribution vehicle re-fleeting programme is now also in progress.

Chinake added the group relied mainly on both shareholders’ equity and debt funding which it deploys, collectively, in the considerable working capital pipelines it needs to establish in order to ensure consistent supply of product to the market, and to ensure that its vast capital maintenance and expansion projects can be executed on. ­

He noted: “Recent monetary policy interventions have resulted in local debt funding becoming unviable from a business model perspective, and having a pervasive impact on the group’s cost of capital.

“As a result, the group has taken firm action to re-arrange its debt facilities as well as revise its working capital strategies in order to adapt to current market conditions; this will remain a key area of focus in the short to medium term.

“Careful consideration of monetary policy interventions in respect of money supply and currency stability, along with practical fiscal taxation policy, remain key determinants in fostering the necessary market confidence conducive for growth.”

While the business environment is expected to remain volatile in the short to medium term, management at Innscor remains hopeful that consistent, pro-business measures and policies will be employed by the Government.

These will encourage further expansion investment into local manufacturing initiatives, reduce the country’s reliance on imported goods in the long-term, and result in increased local job creation.

“The prevailing economic conditions remain complex and challenging, however, the group retains its positive outlook as regards macro growth prospects and a medium-term recovery for the economy.

“Our management teams will continue to adapt and optimise business trading models, with focus being directed to balancing pricing and volume objectives, achieving appropriate levels of margin return, ensuring that overheads are contained, creating bespoke working capital solutions relevant to current market conditions, and, most importantly, ensuring maximum free cash generation,” said Chinake.

Meanwhile, the group recorded a solid performance for the financial year 2022 with a 49 percent revenue jump to $290 billion, while profit for the year rose 350 percent to $53,6 billion.

This was achieved on the back of a sustained focus on diversifying and expanding product portfolios, implementing affordable pricing policies, and employing efficient route-to-market strategies; all of which were further supported by ongoing investment into enhanced manufacturing capacity and capabilities.-ebusinessweekly