Mishma Chakanyuka, Staff Writer 
LISTED milk products processor, Dairibord Zimbabwe (Dairibord)’s business performance for the six months to June 30, 2024 was adversely affected by several fiscal changes introduced at the beginning of the year which affected some of its key product offerings.
The group was mainly affected by the introduction of the sugar tax at US$0,001 per gram, the standard rating of Maheu and the value-added tax on milk powders among others.
These changes resulted in significant price adjustments on flagship products which in turn restricted sales volume.
“The imposition of a special surtax on added sugar in beverages at a rate of US$0.001 per gram effective February 9, coupled with a standard rating of Maheu and VAT on milk powders, and reclassification of liquid milk from zero-rated to exempt, resulted in a substantial increase in the cost of production,” Dairibord chairman Josphat Sachikonye said in the group’s financials.
Dairibord board chairman, Josphat Sachikonye
“This immersed significant pressure on working capital and exacerbated the financial burden on operations.”
Sachikonye noted that cost containment measures employed on manufacturing overheads successfully reduced the cost of sales by one percent from the prior year, notwithstanding the volume and revenue growth.
“Given the persisting constraints within the operating environment, cost reduction has emerged as a paramount imperative. Accordingly, concentrated effort will be directed towards minimizing expenditures by targeting the major cost drivers,” Sachikonye said.
During the half year, the group was restricted to a marginal two percent overall volume growth as consumers struggled to cope with price adjustments.
While the liquid milk and foods categories demonstrated strong performances, this positive trajectory was partially offset by a decline in the Beverages category.
Dairibord’s liquid milk volumes grew by 21 percent year-on-year due to augmented raw milk supply while Chimombe, Steri, Lacto and Supermilk all recorded gains in market share compared to the same period in the previous year.
The foods division experienced a 25 percent increase in sales volume, largely driven by the exceptional performance of Yummy yoghurt and ice creams, along with a recovery in Lyons peanut butter which benefited from improved product availability.
Conversely, The beverages category contracted by eight percent owing to challenges encountered by the Pfuko brand.
“These difficulties arose from price adjustments necessitated by the introduction of the sugar tax and Value Added Tax modifications, compounded by the prevailing scarcity of small denomination coins for change” .
