CFI Holdings’ Farm and City faces difficult times

Agro – concern, CFI Holdings Limited’s retail unit – and group’s biggest business Farm and City Centre (FCC), had a difficult year which saw depressed performance for the year to September 30, 2023.

According to the group, the business struggled due to the difficult economic environment characterised by inflationary pressures, erratic utilities supplies and waning disposable incomes.

“The division struggled under the weight of a difficult operating environment, characterised by unstable multiple exchange rates, high interest rates and reduced consumer spending,” said group chairman, Itai Pasi.

The division resultantly recorded a 15 percent decline in volumes for the period compared to the prior year.

For the current financial year, the group is downbeat about the retail segment as sales are expected to remain subdued due to the projected bad weather.

The World Meteorological Organisation has projected El Nino conditions for the 2023/2024, which could point to production downside for drought-prone countries in Sub-Saharan Africa like Zimbabwe, impacting yields.

“Following the announcement of the 2023/2024 drought caused by the El Nino phenomenon, sales of key agricultural volume drivers such as fertilisers and chemicals are forecasted to remain depressed,” she said.

As a result of the challenging environment, FCC’s contribution to the group turnover declined to 76,3 percent compared to 79 percent in the prior year while milling operations accounted for 20 percent, an improvement from 18 percent. Farming operations contributed 3,4 percent from 2,2 percent.

“Expenses increased in real terms as a consequence of these expenses being pegged by suppliers and service providers in USD but converted to ZWL at prevailing parallel market exchange rates.

“On the other hand, selling prices were determined in line with official exchange rates, which consistently lagged behind market rates,” said Pasi.

She added that the group incurred unrealised exchange losses of $139,5 billion on its foreign currency-denominated loans and creditors.

Consequently, the group posted a loss before tax widened to $125,23 billion against a loss before tax of $3,06 billion from the prior year.

The group has indicated its plans for proactive measures to cushion the business from the medium term challenges emanating from the projected bad weather, which will affect the agriculture sector.

“The operating environment is forecasted to remain challenging and complex in the medium term aggravated by the now prevailing El Nino induced 2023/24 phenomenon which is set to reduce agricultural output in the region.

“Given that the agricultural sector is a mainstay to the Group’s operation, proactive management practices will therefore be employed to ensure the Group’s survival in these difficult times,” she said.

She added the group will also prioritise investment into the milling operations during the financial year 2024 (FY24).-ebusinessweekly