HomeBusinessDairibord invests US$3.5 million

Dairibord invests US$3.5 million

Dairibord invests US$3.5 million

By Edward Mukaro

DAIRIBORD Holdings (DH) is geared to increase production levels in its product mix after injecting an investment of US$3.5 million in key projects.

Buoyed by an impressive performance of Q3 sales volume growth of 78 percent over the same period last year and 23% over the prior year, and year-to-date sales volumes of 67 million litres, which were 63% above the same period last year, DH is optimistic of the future given the prevailing high demand of products.

Capacity utilisation increased from 33% in Q3 of 2020 to 60% in Q3 of 2021 largely due to the growth of the Beverages category. Despite the significant increase in volume across all categories, the business was still not able to meet demand due to supply-side challenges. Major maintenance work on key lines hampered production but will spur volume growth going forward.

“The improved performance achieved in Q3 is expected to sustain into the final quarter of 2021 as demand is expected to remain firm. The business is geared to take full advantage of the high demand through increased production capacity and forward planning for inputs into production.

“The company invested about US$1.5 million in a recently commissioned ammonia plant that will see growth in ice-cream production, improving product portfolio mix and margin performance going forward.

“The company also invested US$2m in additional UHT filling and packing equipment that will double capacity for cartonised beverages towards the end of the 4th quarter of 2021,” DH said in its trading update for Period Ended 30 September 2021.

The diversified concern, however, expressed concern at the depreciation of the local currency and aspects of the auction system.

“The continued depreciation of the ZW$ poses a threat to business performance.

“Notwithstanding the challenges faced by the auction system, the resolutions reached at the recent stakeholder engagement between Government, the RBZ and the business community if adhered to, will have an impact on the forex operating environment and the business at large.”

Revenue for the quarter in inflation-adjusted terms was 11% (23% in historical terms) above Q2 of 2021 and 69% (157% in historical terms) above Q3 2020. Year-to-date inflation-adjusted revenue was 67% above (268% in historical terms) the same period in 2020.

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