Farai Mabeza, Senior Staff Writer 
DAIRIBORD Holdings (Dairibord) says it is pursuing a low-cost model to mitigate operating challenges, which have persisted despite improvements in the environment over the second half of 2020.
In its 2020 annual, the food and dairy products processor said price stability during the year positively impacted on the industry’s ability to secure inputs.
“Other positive developments included improved fuel and power supply in 2020, albeit at significantly increased cost, and the introduction of Statutory Instrument 85 of 2020 allowing companies to trade locally in both ZW$ and US$,” the company’s board chairman, Josphat Sachikonye said.
Dairibord CEO, Anthony Mandiwanza
“Despite the improved business operating environment in the second half of the year, some negative impacts remained throughout such as increased lead times across supply chains, increased labour and utility costs, increased Covid-19 mitigation costs as well as no municipal water at both Simon Mazorodze and Chitungwiza factories.
“To manage the negative impact of the economic factors, the company pursued a low-cost operating model, continuously reviewed efficiencies, diversified routes to market and focused on cash and foreign currency generation,” he said.
The company’s revenue for the year grew by five percent in inflation adjusted terms to $5,3 billion year-on-year, with domestic foreign currency flows accounting for 13 percent of the total.
According to the report, export revenue was affected by Covid-19 border lockdown restrictions and was lower than prior year by six percent
“…a significant growth in domestic foreign currency sales was realised following the introduction of SI 85 of 2020. Total foreign currency revenue increased by 123 percent over 2019 and accounted for 13 percent of the total inflation adjusted revenue (15 percent of historical revenue).
“The revenues generated coupled with proceeds from the auction market contributed towards meeting the company’s import bill,” Sachikonye said.
The company reported an inflation adjusted operating profit of $231 million compared to $407 million in 2019.
Operating costs grew faster than revenue, increasing by 10 percent compared to 2019. As a result, an operating profit margin of four percent was attained, down from eight percent in prior year.
The increase in operating costs was driven by exchange rate movements, notably, costs of utilities, fuel, repairs and maintenance, Dairibord said.
Meanwhile, Dairibord is still locked in merger discussions with fellow dairy producer, Dendairy, which the two parties entered into in July 2020.
