Innscor diversified reach to sustain volume growth

Innscor Africa’s diversified reach will remain key to driving the group forward, equities
research firm IH Securities has said, amid projections this will help the group achieve 19
percent volume growth in the current financial year.

The conglomerate’s operations span various sectors of the economy. The group engages
in fast food services and the manufacture, distribution, and retailing of household
commodities and fresh produce.

It operates through segments: milk-bake, protein, light manufacturing services, and
head office services.

The milk-bake segment focuses on the bakery division, national foods, and noncontrolling interest in proceeds while the protein segment comprises Colcom, Irvin’s,
associated meat packers, texas meat and texas chicken.

The light manufacturing segment entails the production of stock feeds, edible oils,
baker’s fats, sale of other general household products; the production, processing and
marketing of pork and related food products; the manufacture and retail of household
goods and appliances.

It also involves the production of chickens, table eggs, and day-old chicks; downpackaging and manufacture of grocery products such as rice, dairy, candles and beverages; and the production of a variety of bags for packaging, which include openmouth bags, general purpose bags and carrier bags.

IH in its equities review report said the US$56 million in additional investment planned
for the financial year 2023) with the announced launch of the sorghum beer line from
Buffalo Brewing company is going to deepen product offering.

“Management has said it is aiming for 19 percent volume uplift in the current financial
year with increased focus on route to market within the informal sector.
“We believe that volumes will remain defensive despite the contractionary policies at
play,” it said.

During 2022, the group experienced supply-side challenges in the form of increased
freight costs and delays in procuring inputs and capital expenditure goods.

However, growing demand from the informal market and improved product mix helped
boost double-digit volumes growth for most of the group’s segments.

In the mill-bake segment, annual loaf volumes were 19 percent over the comparative
year aided by improved loaf quality, and a renewed focus on the sales and distribution
functions.

Aggregate National Foods volumes grew 8 percent year on year, whilst Profeeds volumes
increased 15 percent with an encouraging performance from the relatively new fish feed
category.

In January 2022, the Administrative Court overturned the Competition and Tariffs
Commission’s directive for the Group to disinvest from Profeeds, but the CTC has since
appealed the judgment to the Supreme Court.

In the protein segment, Colcom volumes grew 11 percent year on year whilst Day old
chicks and Frozen chicken units under Irvine’s grew 25 percent and 17 percent
respectively.

The Associated Meat Packers (AMP) group recorded growth across all categories to 16
percent. IH said in other light manufacturing and services, investment into capacity
initiatives paid off with strong growth shown across all the units.-The Herald