Innscor’s US$160m capex bet pays off

INNSCOR Africa (Innscor) has significantly boosted volumes across its major business units in the just-concluded fiscal year to June 30, 2024, and is now beginning to realise the benefits of its US$160 million investment in capacity expansion over the last three years.
The Victoria Falls Stock Exchange (VFEX)-listed conglomerate, with operations spanning across light manufacturing, distribution and retail sectors, announced an ambitious US$160 million extensive capital expansion program in 2021 that was meant to augment its production capacities at all its subsidiaries.
The programme has so far seen US$125 million paid towards recapitalisation of production facilities during the first two years combined with a further US$32 million injected last year.
“Despite the complex trading environment, positive volume growth was registered across all core group manufacturing units, underpinned by a firm recovery within the Mill-Bake segment, combined with increased contribution and capacity uptake in both the beverage and other light manufacturing segments,” the group said in its financials for the fiscal year ended June 30, 2024.

“Overall volume growth has been supported by the extensive investment programme undertaken between 2021 and 2024, which has seen expansion of existing capacities, extension of manufacturing capabilities into adjacent product categories, and investment into new products for the group.”
­The group recorded revenue of US$910,1 million during the period under review, representing growth of 13,2 percent over the comparative year
“This performance was driven primarily by pleasing volume growth across the entire portfolio,” the group said.
Overall volume growth of six percent over the comparative year was driven by a strong recovery across the mature milling operations and supported by an impressive volume uptake in the new fast-moving-consumer goods (FMCG) business cluster.
Loaf volumes within the bakery division closed 12 percent ahead of the comparative year “supported by additional capacity, enhanced loaf quality, stable flour pricing, improved distribution efficiency, and an acute focus on ensuring convenient and efficient pricing to the consumer.”
The division commissioned its new, state-of-the-art, and fully automated production line in Bulawayo during the second quarter of the year under review.
­The stockfeed division delivered volume growth of eight percent over the comparative year, with this performance largely driven by the poultry category, which continued on its positive growth trajectory. ­
The division continues to progressively invest in enhancing efficiencies at the Harare Aspindale plant, with an upgrade of the ruminant plant to be undertaken in the new financial year.
The cereals unit grew by eight percent over the prior year on the back of a strategy to offer a full range of breakfast cereals to the consumer.
Some of the new products have started to make in-roads in regional markets, albeit at low volumes at this point.
The group said it will prioritise cost containment and margin preservation this year in response to headwinds in the economy.
Operating profit, before depreciation, amortisation, and fair value adjustments, net of financial gains or losses (“EBITDA”) for the period under review came in at US$86,048 million, a 13,7 percent increase from the US$75,656 million recorded in the comparative financial year.
Depreciation and amortisation improved by 22 percent compared to the prior year, driven by the significant investment across the group during the previous three financial years.
The group’s net interest expense of US$9,238 million recorded in the current year under review represents a 31 percent reduction compared to the US$13,443 million incurred in the comparative year; with a portion of that period having contained expensive local currency borrowings.
Fair value adjustments of US$12,008 million arose mainly from the group’s significant biological asset holdings in the protein segment, and the application of the full provisions of IAS 41.
The Innscor associate businesses delivered a positive earnings contribution of US$4,990 million in the current year through the equity-accounted earnings line, and this compared with earnings of US$1,723 million in the prior year.
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