NatFoods maize division poised for slight growth

NATIONAL Foods’ volumes for its maize products will post a marginal growth in the current fiscal year, amid the El Niño phenomenon, a local research firm has said.
The southern African nation is expected to receive normal to below-normal rainfall in the coming summer season, with analysts fearing that it will pose a serious threat to economic growth going into next year.
National Foods is one of the leading maize milling companies in the country and for the full year ended June 30, 2023 (FY23), realised a 9,4 percent volume decline for the maize category.
The slump was attributed to pricing distortions and the duty-free proclamation on basic goods.
“In the maize category, despite El Niño weather conditions pointing to possibly a lower domestic harvest and sales upside for National Foods, we however expect marginal uplift of volumes in the category weighed down by the continued suspension of import duty on basic goods,” IH Securities stated in its National Foods earnings review.

“National Foods has continued with its ongoing capacity expansion initiatives, thereby providing further volume potential for the group.”
The group’s sales in foreign currency are expanding, which is consistent with the dollarisation of the economy and the availability of adequate funds for the purchase of raw materials.
In FY23, the group’s revenue jumped 21,7 percent to US$343 million despite negative volume growth as elevated realised prices per tonne buffered the topline.
“We estimate that National Foods’s topline will grow two percent year-on-year to US$350 million in FY24 as moderating selling prices offset volume growth,” reads the report.
Earnings before interest, taxes, depreciation and amortisation margins, however, slowed from 9,9 percent in FY22 to 6,8 percent within FY23, as many cost lines effectively dollarised and the full extent of raw material inflation was not passed on to the consumer.
Profit after tax was off 39 percent to US$9,53 million in FY23.
The group closed the period with a net cash position of US$3,81 million.
National Foods declared a final dividend of US1,15 cents, bringing the total dividend for the year to US4,05 cents.
“Strategic focus for management in the current financial year will be on optimising operating efficiencies and product quality,” IH Securities said in its outlook.
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