Flour milling, snacks units to drive Natfoods production

Analysts project increased production for food processing giant – National Foods Limited on the back of enhanced capacities for its flour milling and snacks segments.

The group indicated they have already started installation of a new mill at Bulawayo site and the mill remains on track for commissioning early in 2023.

Market watchers see this as step in the right direction for the food processor as this is expected to enhance production efficiencies and ensure product availability.

“Capacity increase initiatives in the flour milling, snacks and cereals segments will be in our view major drivers for increased production,” said IH Securities in an earnings review update.

According to Natfoods group chairman, Todd Moyo, the new mill will increase wheat milling capacity by around 2,000 tons per month and will reduce import dependency.

During the full year to June 30, 2022, the flour million division recorded a 1,9 percent decrease in volumes compared to the same period last year, with a slow-down in the last quarter, as price increases driven by higher international wheat prices and the reduced availability of local wheat dampened demand.

For the maize, there was improved volume momentum in this segment in the second half of the year, but volumes still closed 2,3 percent below prior year, largely due to last year’s excellent harvest.

“Turning to the most recent season, the rainfall was erratic and the harvest has been further disturbed by unseasonal winter rains. It is anticipated that imports will be needed to fill the gap before the 2022-2023 harvest and the Group has already started on a maize importation program.

Demand wise, maize volumes are expected to remain flat to FY23 due to cheaper imports of maize products by private players dragging down performance for the overall group.

According to IH forecasts, margins are “likely remain buoyant as some major cost lines such as fuel expenses marginally ease and unanticipated interest charges from the prior period are paid down.”

Notwithstanding the challenging economic conditions, the group remains optimistic on the overall medium-term trajectory of the economy driven largely by the mining and agricultural sectors.

The group has announced intention to move its listing to the VFEX which will induce greater transparency in numbers and also provide enhanced regional opportunities.-ebusinessweekly