Colcom records 34pc growth

Business Reporter

FOOD processor, Colcom Holdings Limited revenue for the first quarter of financial year 2017 was above prior comparable period on increased volumes traded and 34 percent growth in pigs delivered. Chief executive Constantine Tumazos told shareholders yesterday that the revenue increase however did not push gross profit up for the period under review.“The increased revenue did not directly translate to strong gross profit dollars due to the reduction in average selling prices,” said Mr Tumazos without providing the figures.  “This reduction came about primarily from a direct reduction in prices of product across the whole range of over the prior year period but has been compounded by a significant shift in sales mix from processed foods to fresh meat and carcass sales,” he said.

Volumes at Colcom Foods were up on prior year but competitive pricing into the market and a significant shift in sales mix held back revenue growth to modest levels. Mr Tumazos highlighted pie volumes for the quarter were significantly up on prior comparable period. However, deep cut prices offered by competition partially offset market share gains achieved during financial year 2016.

In the period under review, additional delivery of pigs allowed volume growth in carcasses and fresh pork. The group’s auxillary pig production facility whose second phase came in line in March 2016 added 150 pigs per week to production. As a result, it contributed to the 34 percent increase in pigs delivered in the quarter against those delivered in the same quarter last year.

The challenging economic environment had a knock on effect on the business during the quarter under review. The cost of maize charged to production was 15 percent higher than charged in the prior year period with management indicating the regional shortage of maize will result in further increase in raw material prices before the next harvest.

“The increase in volumes has naturally contributed to an increase in revenue at Tripple C. “Unfortunately the cost of raw materials, specifically maize, has increased significantly, offsetting the benefits of production efficiencies achieved,” said Mr Tumazos.

Revenue at AMP was slightly behind that reported in the comparative quarter last year, while volume increases were negated by depressed beef prices. The cash shortages also made it difficult for the smooth procurement of beef, especially from communal farmers. Despite the challenges, the group opened three more Texas Meats branches in Makoni, Chegutu and Glenview.

Plans are underway to open additional branches in Gweru and Mutare in the current financial year. Meanwhile, Colcom chairman Mr John Koumides is stepping down from his role to take up an executive position at Axia Corporation.Both Axia and Colcom are subsidiaries of the industrial conglomerate Innscor Africa Limited.