Business - Companies & Markets - Featured - Local - October 25, 2021

Dairibord invests US$3.5 million towards ice cream production and UHT filling

Largest milk producer in Zimbabwe, Dairibord Zimbabwe Limited (DZL) has invested about US$1.5 million to ramp up ice cream production and US$2 million in additional Ultra High Temperature (UHT) filling and packaging equipment, the Group’s trading update for the third quarter ended 30 September 2021 reveals.

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

Additionally, the US$2 in UHT filling and packing equipment is expected to double capacity for cartonised beverages towards the end of the 4th quarter of 2021.

Meanwhile, in its trading update, the group reveals that the beverages category anchored the growth with a 165% increase over prior year, whilst the Foods category grew by 49%.

Liquid Milks surpassed previous year by 13%. However, growth in the Liquid Milks category was constrained by raw milk supply shortages. Capacity utilisation increased from 33% in Q3 of 2020 to 60% in Q3 of 2021 largely due to growth of the Beverages category.

Raw milk utilised in the quarter was up 7% from Q2 and up 5% over prior year. Cumulative raw milk utilised was 3% ahead of prior year.

“The Government launched command silage, a welcome initiative intended to support dairy farmers grow their own silage in order to improve stock feed availability and reduce cost of milk production. This should see improved milk production in the ensuing year. Q3 sales volumes grew by 78% over same period last year and 23% over prior quarter. Year to date sales volumes of 67 million litres were 63% above the same period last year,” reads the update.

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.

However, Dairibord’s company secretary Samson Punzisanai said despite the significant increase in volume across all categories, the business was still not able to meet demand due to supply side challenges.

The operating environment for the three months to 30 September 2021 was affected by the level 4 COVID-19 lockdown restrictions between 29 June and 07 September 2021, but the impact was not as severe as that experienced in 2020. The widening margin between the official and parallel exchange rate exerted pressure on margins and threatens the positive inflation trend that saw Year-on-Year inflation decline from 659.40% in September 2020 to 51.55% in September 2021.

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