Colcom remains resilient in the face of headwinds

Diversified industrial giant, Innscor Africa Limited’s unit, Colcom, remained resilient during the third quarter to March 31, 2024 despite a challenging operating environment.

According to the group, the segment, comprising Triple C Pigs and Colcom Foods, continued to deliver solid results during the quarter as overall pork volumes closed 3 percent ahead of the comparative period.

The group attributed the growth to sustained demand for fresh pork coupled with a recovery of processed lines, including polonies, bacon and hams, all of which have benefited from improved trade dynamics within the retail segment.

­However, the period had its own challenges as businesses and the group operated under challenging and turbulent economic conditions during the quarter under review. The period was characterised by significant local currency devaluation and material fiscal policy changes. ­These policy changes resulted in the Value Added Tax (VAT) status of most basic commodities being changed from zero-rated to exempt. ­

“This change had the effect of increasing the costs of production of many of the group’s key lines such as bread, milk, maize meal, salt and stockfeeds among others, with the input VAT incurred in the production of these items no longer ranking for deduction in the respective VAT returns,” said group company secretary Andrew Lorimer in a trading update.

Within the protein segment specifically, most products moved from exempt status to standard-rated, resulting in increased pricing in these products from producers in the formal sector and providing further pricing advantage to informal, unregistered producers.

However, the group is offsetting some of the challenges by carrying out several investment projects to enhance efficiency across various segments.

­“The Coventry Road factory operations continue to receive significant investment, targeted at further modernising product manufacturing, and increasing capabilities and capacities,” said Lorimer.

At Triple C Pigs, Lorimer revealed nine-month cumulative volumes closed at the same level as the comparative period, and ongoing investment to expand piggery operations and dedicated breeder sites is well underway to meet the growing consumer demand for pork in Zimbabwe.

Other units, like Irvine’s cumulative nine-month volumes for Frozen Poultry and Day-Old Chicks closed 5 percent and 4 percent, respectively, ahead of the comparative nine-month period, whilst the Table Egg category operated near capacity for the duration of the period, and volumes closed in line with the comparative period.

Investment initiatives directed toward capacity extensions within the frozen chicken category remain a strategic priority for the business.

At Associated Meat Packers (AMP), overall protein volumes closed 12 percent ahead of the comparative nine-month period. The beef category, in particular, registered a recovery of 24 percent against the comparative period, which saw constrained supply owing to foot and mouth disease restrictions. Initiatives continue to be focused on the optimisation of the “Texas” retail network to ensure a world-class, all-encompassing protein retail experience for the Zimbabwean consumer.