Dairibord pursues lean cost structure

Dairibord Holdings is aggressively pursuing a lean and agile cost structure, ensuring sustained profitability and long-term value creation for stakeholders as its toll manufacturing project in South Africa is at an advanced stage.

The toll manufacturing project is anticipated to enhance foreign currency earnings and mitigate some risks associated with the Group’s local operations.

In its 2023 annual report, group chairman and independent, non-executive director, Mr Josphat Sachikonye said as part of its growth strategy, it will continue to explore avenues for expansion, both domestically and regionally, while ensuring a sustainable and responsible approach to business operations.

“The group is well-positioned to capitalise on emerging opportunities.

“As part of its growth strategy, the organisation will continue to explore avenues for expansion, both domestically and regionally, while ensuring a sustainable and responsible approach to business operations,” said Mr Sachikonye.

“The 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,” he added.

He said raw milk supply growth and the capital investment drive will underpin the overall volume trajectory.

Focus will be deployed on expanding plant capacities, optimising manufacturing capabilities, maintaining financial discipline and investing in technology and innovation to enhance product offerings.

Group Chief Executive, Ms Mercy Ndoro said the group utilised 31,4 million litres of raw milk in the year, 10 percent above prior year, which accounted for a notable 34 percent of milk intake by processors.

She noted that part of this growth is credited to the successful strategy of on boarding several existing farmers from other processors. Additionally, the Group welcomed new producers, further contributing to the expanding pool of its raw milk suppliers.

“The established farmers demonstrated their commitment by increasing their milk supply by 3,9 million litres compared to the previous year.

“Encouragingly, the new producers also played a valuable role by contributing an extra 2,3 million litres to the total volume of milk processed by the Group in 2023,” she said.

She indicated that the Milk Supply Development Unit has achieved significant accomplishments through collaborative efforts with agronomists and other key partners.

The development successfully increased the average daily milk output per cow by an impressive 9,1 percent.

“However, the volume of raw milk in the ‘A Band’, which represents our highest quality tier, decreased from 53,4 percent in 2022 to 49,6 percent in 2023.

“Emphasis is being placed on improvements in raw milk quality to ensure consistent, top-grade milk production.

“Due to the limited availability of affordable, long-term funding, there were very few opportunities for farmers to benefit from finance facilities arranged by the company.”

The Group recorded an operating profit of $69,3 billion (historical: $47,3 billion), a 48 percent increase (historical: 987 percent increase) over prior year.

The operating profit margin achieved was 9,57 percent (historical: 10,44 percent) up from 9,52 percent in 2022 (historical: 9,53 percent).-chornicle