Dairibord reports 38 percent increase in raw milk intake

Dairibord Holdings Limited, Zimbabwe’s leading milk processor, reported a 38 percent increase in raw milk intake for the first quarter ending March 31, 2024.

This increase to 9,46 million litres from the previous year’s 6,86 million litres was a result of the effectiveness of the company’s aggressive milk growth initiatives and its strong farmer support programmes.

In their trading update, Dairibord said this growth outpaced the national milk intake growth of 21 percent for the same period, solidifying its position as the industry leader in raw milk procurement.

Overall sales volumes saw a modest 2 percent rise, with notable gains in the liquid milks and foods categories. Liquid milk volumes surged by 14 percent, fuelled by the increased raw milk intake.

The foods category also performed well, with a 7 percent growth compared to the previous year’s first quarter. However, the beverages category faced a slight setback, with a 3 percent decline.

A significant shift was observed in the currency of sales, with 85 percent of volumes sold in United States Dollars, a substantial increase from 58 percent in the previous year’s quarter.

“The proportion of volumes sold in United States Dollars increased to 85 percent, up from the 58 percent recorded in the same period last year. This was buoyed by a commendable 97 percent increase in export volumes. In contrast, domestic volumes declined by a marginal 3 percent,” the company said.

This shift was largely driven by a remarkable 97 percent increase in export volumes, although domestic volumes saw a minor 3 percent decline.

Exports now constitute 9 percent of total sales volume, more than double the 4 percent share from the same period last year.

Despite these positive volume trends, revenue for the quarter was 1 percent lower than the comparative period last year, primarily due to a decrease in the price per litre.

However, successful cost containment efforts led to a 16 percent reduction in operating costs, enhancing operating profit margins to 10 percent, up from 6 percent in the prior year.

“Headwinds persist in the global operating environment as slow economic growth is anticipated worldwide, a result of various challenges including geopolitical tensions and ongoing supply chain disruptions. Poor rainfall due to the El Nino phenomenon poses a big threat to the region, the country and the business,” the company added in their outlook.

Dairibord has proactively mitigated some of these risks by commissioning water reservoirs at its factory sites, ensuring a more stable water supply.

Looking ahead, Dairibord is preparing for the traditionally low-demand second quarter, focusing on opportunities arising from recent and ongoing capital investments aimed at optimizing efficiencies and boosting capacity.

The company plans to continue its aggressive cost containment and reduction initiatives to further enhance profitability.

Despite the challenging environment, Dairibord’s strategic initiatives and robust performance in raw milk growth position it well for sustained long-term growth.

The company’s commitment to its suppliers and proactive investments in infrastructure underscore its resilience and adaptive capabilities in the face of ongoing economic headwinds.-ebusinessweekly