Bold investments bolster Innscor profits

DIVERSIFIED business giant, Innscor Africa Limited says its three-year investment drive, during which it made substantial investments across various projects, has resulted in a significant increase in volume across the company’s portfolio – in the process contributing to increased overall group profitability.

The company continues to generate remarkable cash revenues, pocketing US$106,103 million from operating activities this year.

Strong operating cash flows have facilitated the continuation of the company’s extensive investment programme, with a total investment of US$72,774 million.
The Victoria Falls Stock Exchange (VFex)-listed industrial giant has embarked on a massive capital investment initiative to boost production efficiencies to enhance output and consolidate its market share.

For instance, the listed entity invested US$30 million into its Bakers Inn unit in Bulawayo. The investment resulted in a state-of-the-art, automated bread-making facility in Bulawayo, generating substantial economic benefits.

The factory boasts a daily production capacity of approximately 160 000 loaves of bread, marking a significant milestone for the industry. Experts consider it a game-changer due to its cutting-edge machinery, showcasing genuine technological advancements.

In its financial results for the year ended June 30, 2024, the diversified industrial conglomerate said notwithstanding the turbulent and complex market conditions under which the group operated during the period under review, solid and encouraging volume growth was registered across the portfolio and this was key in delivering the improvement in overall profitability.

Earnings quality remained excellent, with strong free cash generation, the group is now well positioned for sustainable growth in the period ahead, said Innscor.
“The group has undergone a three-year period of intensive and significant investment into factory expansion and in doing so has also entered a number of exciting new categories.

“Many of these investments are now complete, or nearing completion and as a result, focus will now be deployed by management in ensuring that these new investments generate the targeted returns,” group chairman, Mr Addington Chinake, said.

He noted that as a manufacturing entity, the attainment of critical volume mass is vital to ensure necessary operating efficiencies and economies of scale can be achieved.

Mr Chinake said volume performance will, therefore, be a key area of focus for management in the year ahead.

In the period under review, the listed group recorded revenue of US$910,065m, representing growth of 13,2 percent over the comparative year. ­

The group’s statement of financial position remained robust, with a strong fixed asset base, supported by efficient working capital positions and negligible net debt, net gearing closed at 9,2 percent at the end of the current financial year under review,” he said. ­

Addington Chinake

“The group’s current year cash generation was outstanding, with cash generated from operating activities of US$106,103m being recorded. ­The strong operating cash flows enabled the group to continue its extensive investment programme, with a total of US$72,774m invested in the year under review.”

During the period, loaf volumes within the bakery division closed 12 percent ahead of the comparative year, supported by additional capacity, enhanced loaf quality, stable flour pricing and improved distribution efficiency.

The firm said its recently commissioned automated production line in Bulawayo operated extremely well since commissioning, significantly enhancing the manufacturing efficiency, quality and consistency of the loaf in the operation’s Southern region market.

“Further automation initiatives are underway in the business in both the Harare and Bulawayo production sites, and, in addition, a new, fully automated production line will be added to the Harare site in the latter part of the new financial year,” said Mr Chinake.

“These initiatives to grow and enhance the manufacturing base will be supported by continued optimisation of the bakery distribution business.”

The report notes that the newly-created Pasta division commissioned in February this year represents the first ever large-scale commercial pasta line to have been commissioned in Zimbabwe, and will result in the localisation of the production of pasta, a product that has typically been imported into the country.

“The investment should be complementary to the strong recovery in local wheat production and means that the country can potentially save substantial foreign currency by value-adding flour from locally-grown wheat,” he added.

The construction of a fully automated stock feed plant in Bulawayo is at an advanced stage of development and is scheduled for commissioning in the first half of the forthcoming financial year, said the company. ­-chroncile