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Competition Weighs Heavily on Dairibord

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Fierce competition coupled with a decline in productivity at farms due to incessant rains in the first quarter of 2017 have weighed heavily on Dairibord holdings half year results with the giant parastatal recording a 20 percent drop in sale of raw milk.

According to Dairibord Holdings Group Chairperson, Dr Leonard Tsumba, the impact of the heifer procurement program remains positive with 14% of DZPL’s milk intake coming from animals bought under the heifer scheme.

“Recovering lost milk intake is a priority for the business through measures which include attracting new farmers, increasing productivity on existing farms and growing the herd.

“The impact of the heifer procurement program remains positive with 14% of DZPL’s milk intake coming from animals bought under the heifer scheme,” said Tsumba.

He added that volumes sold across all categories was above the previous period, benefiting from investments made in 2016, line extensions, firm demand and the Statutory Instrument 64 of 2016.

“Volume sold across all categories was above the previous period, benefiting from investments made in 2016, line extensions; firm demand, and SI64, volumes grew by 4% to 37.398 million litres with Liquid Milks, Foods and Beverages increasing by 2%, 10% and 3% respectively.

“The first quarter was constrained by bad weather and disruption of business activities due to system changeover challenges during consolidation of operations.

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“Performance improved in the second quarter, but was impacted by shortages of inputs, mainly raw milk and imported materials.

“In terms of key volume drivers, Pfuko grew 31% driven by new flavors that were launched in May 2016. UHT milks grew by 24% on account of the cartonised lines yoghurts, salad cream, tomato sauce and peanut butter recorded strong demand.

“Average selling price per litre firmed to $1.15 from $1.14, a 1% increase on the first half of 2016 and the increase was on account of the change in product mix driven by growth in the Foods category which have a higher selling price per litre.

“Growth in volumes and price per litre culminated in a 5% growth in revenue, to $44.630 million,” said Tsumba.

The Group’s loss before tax inclusive of restructuring costs of $0.866 million narrowed to $1.076 million from $2.514 million the previous year.

In light of the performance of the business and the need to support the turnaround initiatives, the Board will not declare a dividend for the six months ended 30 June 2017.

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