CFI Holdings (CFI) says sales at its subsidiary, stockfeed manufacturer Agrifoods, dropped four percent during the five months ended February 28, 2023, indicating that consumers are reducing spending in reaction to low disposable incomes and rising inflationary pressures.
As consumers struggle to afford basic products, their spending and shopping habits are changing.
“Agrifoods’ performance was depressed, with sales decreasing by four percent mainly as a result of decreased consumer spending,” acting chief executive Shingi Chibanguza told shareholders attending the company’s annual general meeting recently.
“During the period and as the economy continued to redollarise, consumer spending power declined compared to the same period last year as a result of reduced agricultural output and depressed producer prices of both tobacco and maize.”
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Agrifoods has a strong market presence and has been expanding its operations in recent years.
In 2019, Agrifoods invested in a new milling plant, increasing production capacity by 50 percent. The company has also been investing in research and development to improve its product offerings and efficiency.
“Production increased by six percent, with major raw material procurement issues being resolved through strategic agreements,” Chibanguza said.
Analysts say the firm seems to be well-positioned for growth in the coming years.
In addition to continuing to grow table potatoes, Chibanguza revealed that Glenara Estates established 230 hectares of soya beans and 550 hectares of commercial maize for the group’s operations.
“Glenara has remained profitable on the back of the farm recapitalisation undertaken in prior years and reasonable yields being attained in its farming operations,” he said.
Victoria Foods continues to maintain the prior year’s performance in its second year after exiting judicial management.
“The entity is expected to increase output with a growth forecast on its flour, mealie meal and other segments.”
The group’s retail sales volumes for agricultural inputs declined compared to the same period last year, despite the above normal rains expected during 2022/23 farming season.
In historical terms, the group’s revenue for the five months ended February 28 surged by 283 percent to $30,2 billion from $7,8 billion in the prior comparative period. Gross profit rose 346 percent to $8,1 billion from $1,8 billion previously.
In the outlook, he said the business is concentrated on expanding the companies and revitalising all operations to regain lost market share and provide shareholders with reasonable returns.
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