National Foods investments begin bearing fruit
Food processing giant, National Foods Holdings Limited is beginning to see the benefits of the massive capital it has injected into enhancing capacity utilisation at its factories across the country in a development expected to cushion it from some of the challenges besetting the economy.
The group has over the past few years invested millions of US dollars into various segments of its production facilities as part of ongoing capacity expansion to optimise volume growth potential and improve efficiencies.
In February this year, NatFoods commissioned the country’s first large-scale pasta line whilst other investments in the pipeline include a new biscuit line, which will extend the product portfolio to specialised biscuits such as creams, and ongoing work to increase the stockfeed manufacturing capacity.
Management earlier indicated its focus would be to optimise the performance of the new capital investments, and are already performing in line with expectations.
“As previously advised, the new flour mill in Bulawayo is performing to expectation and the efficiency gains from this investment have been encouraging,” the group said in a trading update for the third quarter to March 31, 2024.
“The new pasta plant, which has been installed in Harare was commissioned in February 2024.
“This is the first large-scale pasta plant in the country and deliveries of products to the market have commenced. The new biscuit line is expected to be commissioned in June 2024,” said NatFoods.
The company recently reported solid volume performance for the quarter, a feat achieved against the backdrop of an improving but still challenging operating environment, which impacted volume momentum in some categories, notably flour and rice during the quarter under review.
Volumes for the third quarter at 145 000 tonnes were 5 percent above last year, with strong performances in maize and snacks offsetting the losses in flour and rice.
“Flour volumes were impacted by the price of bread which momentarily breached the key US$1 per loaf price point following the change in VAT status.
“Following the decision by bakers to revert to the original price point and to ingest the additional cost incurred, thereby considerably reducing margins, volumes have recovered somewhat,” said the Group.
The maize category recorded a 43 percent volume growth for the quarter and 11 percent for the nine months to March, 31, 2024.
Snacks and CCB (Cereal) volumes showed encouraging momentum rising 49 percent and 12 percent respectively as the capacity enhancements were commissioned.
On a year-to-date basis, the snacks and CCB rose by 38 percent and 9 percent in that order.
Revenues for the quarter at US$89 million, were flat against the same period last year.
On a year-to-date basis, volume at 430 000 tonnes was 3,9 percent above the comparative period the prior year. Revenue for the 9 months amounted to US$261 million, which was 2,2 percent ahead of the same period last year.
Going forward, the group’s focus will be to ensure adequate stocks of competitively priced, basic goods, for the consumer across the country over the next 12 months.
In the period ahead, considerable focus is also being placed on ensuring that the new categories that have been added to the group’s portfolio are successfully launched, and achieve the targeted returns on investment.-herald
