Dairibord profits lower

year.

The plant rationalisation project negatively affected product supply in the first quarter for Dairibord Zimbabwe.

“The group results for the half year ending June 30, 2013 will reflect operational challenges encountered due to the plant and staff rationalisation projects, escalating costs and liquidity challenges in the market,” said Dairibord.

The Zimbabwe Stock Exchange-listed company said profitability for the first half is expected to be lower than for the same period last year and shareholders were advised to exercise caution in dealing with their shares.

The dairy processor recorded a 20 percent jump in operating profit in the interim to June last year, but had seen net profit decline from US$2,3 million to US$1,9 million.

As part of rationalisation Dairibord suspended production activities at its Bulawayo and Mutare operations with specific business activities — part of liquid milk, foods, beverages production and logistics business — undertaken there, centralised to Harare and Chitungwiza.

Group chief executive Mr Anthony Mandiwanza said the benefits of the restructuring would come in the form of reduced costs from discontinuation of certain support services, such as management and boiler systems used to support these cost centres.

He said DZL would rationalise its head count by reducing the numbers.

He said the plant and staff rationalisation would reduce the group’s workforce by at least 12 percent to about 1 500.

In March, Dairibord Zimbabwe said it would undertake a number of initiatives to avoid the recurrence of a stagnation of profitability that characterised the year to December 31, 2012.

The company said this was due to a mismatch between revenue, volumes and costs.

DZL saw revenue increasing by only 11 percent to US$107 million vis-à-vis the previous year.

Costs increased faster, jumping 14 percent on the 2011 comparative period to weigh down on profit. Volumes also trailed costs, despite rising by 10 percent.

The profit for the year to December 2012 was little changed at US$7,1 million, compared with US$7 million achieved in prior year, although revenue went up from US$95 million to US$107 million last year.