Dairibord sale of properties proceeds flawlessly

Dairibord Holdings’ plans to raise US$4,12 million through the disposal of 25 properties is proceeding as expected following high interest received on some properties already sold.

In its annual 2023 report, Dairibord said the total value of the 25 properties at the date of the last valuation was US$4,12 million, and in January this year, it issued mandates to four registered estate agents to facilitate the disposal.

The proceeds from the sale of the properties will focus on enhancing the group’s long-term capabilities and improving overall process efficiencies.

As of the reporting date, one property had since been sold (Stand 335 Chiredzi), which had a book value of ZWL5850 000 000 and was sold for a total of ZWL5712 000 000, resulting in a loss of ZWL$138 000 000.

Group chief executive, Mercy Ndoro, said in an interview that the disposal process for the properties is proceeding at an expected pace, acknowledging the inherent time frame associated with real estate transactions.

“The level of interest received to date has been quite high and a portion of the properties have already been successfully sold,” she said.

She noted that the company will strategically allocate these resources towards new capital projects and other initiatives aimed at eliminating operational bottlenecks.

“These investments will focus on enhancing our long-term capabilities and improving overall process efficiencies,” said Ndoro.

Amid fears that the transactions could impact employment, Ndoro indicated that there would be no negative impact on staff.

She said of the 25 properties on sale, 15 are residential units located in small towns, most of which are occupied by staff members as tenants.

“In recognition of their service, we have provided these staff members with the opportunity to purchase their current homes and are pleased to report that the majority of them have chosen to exercise the purchase option,” Ndoro said.

She added that the remaining 10 properties consist of depots that are currently leased to external parties and some manufacturing factories that are currently used as distribution depots.

“The company will still retain its distribution presence in those markets using alternative properties,” she said.

As part of its other growth strategy, Dairibord continues to explore avenues for expansion, both domestically and regionally. The group’s toll manufacturing project in South Africa is at an advanced stage and is anticipated to enhance foreign currency earnings and mitigate some risks associated with the group’s local operations.

Dairibord is a leading manufacturer and marketer of food and beverage products, offering various products, including liquid milk products (short and long shelf life), cultured milk products and cream milk products.

Other products are food products comprising yoghurt, ice creams, cheese, ice cream cone shells, condiments, spreads, sauces, butter, and ghee, and beverages, which include cordials, ready-to-drink dairy and non dairy beverages, teas, mineral water, juices, and drinking chocolate.

In a recent interview, Ndoro said the implementation of a per-gramme sugar tax on beverage products resulted in a direct and quantifiable increase in production costs, as sugar is a significant and essential raw material in the manufacture of beverages.

“The cost of production has significantly increased, making Zimbabwean products uncompetitive, and there is a significant risk that the beverage industry as a whole will become uncompetitive compared to our neighbouring countries,” she said.

Ndoro said Zimbabwe’s sugar tax, currently the highest within the Southern African region, has demonstrably exacerbated price sensitivity among consumers within the beverage sector.

“This poses a significant challenge to the overall competitiveness of domestic beverage manufacturers and there is also an elevated risk of increased grey imports of unauthorised, potentially lower-quality and untaxed substitute products,” she said.

Ndoro noted that the requirement to remit the sugar tax on a monthly basis, potentially preceding the settlement of invoices by retailers and distributors, exerts a significant strain on the company’s working capital, which, in turn, negatively impacts overall liquidity and hinders operational efficiency.

“There is also a need to remove some basic commodity beverages from the sugar tax on products that include Maheu and Dairy Fruit Drinks, as they form part of the basic needs of our population,” said Ndoro.-ebsuinessweekly