eBusiness Weekly
Enacy Mapakame
Innscor Africa Ltd will start seeing the benefits of its livestock project in the financial year 2019, according to latest analysts predictions.
It is projected that revenue is expected to rise by 10 percent to $695 million and pre-tax earnings by 12 percent to $86,2 million.
Margins will climb to 13 percent, thanks to improved efficiencies and reduced impairments.
Analysts at brokerage firm IH Securities say Innscor is well-positioned for growth after a series of capital investments over the past year.
The industrial conglomerate, currently valued at $1,3 billion, invested money into boosting milling capacity, dairy production and pie production.
It also set up a Polymerase Chain Reaction (PCR) facility, the only such laboratory in Zimbabwe to provide accurate on-site testing for Avian Influenza.
About $8 million went towards replenishing the chicken count, after the deadly flu virus led to the culling of hundreds of thousands of birds at subsidiary Irvine’s, and many more similar killings throughout Zimbabwe.
Resultantly, national table eggs supply tumbled by almost half.
Although day-old chicks are still being imported, management expects local production of day-old chicks and frozen chicken at Irvine’s to completely normalise in the second half of FY19 as the breeder flocks have been recently replenished.
Innscor Africa has also added further bio-security controls in mitigation of future outbreaks of deadly diseases.
It is anticipated the industrial giant will buck the economic trend and maintain the growth trajectory achieved in FY18 as several initiatives have been made to support growth.
“Innscor’s position allows for significant economies of scale, which lead to a competitive advantage in an inflationary environment,” said brokerage firm IH Securities.
“We are optimistic about the company’s growth prospects into FY19 as good progress has been made into the beverages and dairy categories,” said IH.
The group launched Prodairy during the FY18 period, which fits well in the group’s growth strategy and diversification.
Success of Prodairy, however, is hinged on availability of raw milk. To ensure availability of milk for the business line, Prodairy is already working with contract farmers to ensure constant milk supply for the business line.
The group has already started the process of backward integration into raw milk and invested into a dairy herd of 400 through a partnership with the Government.
Additionally, the automation of the milling plant at National Foods will bring both capacity and efficiency improvements after plans had previously been delayed due to foreign currency shortages.
“We also anticipate improvement in efficiency in the mill-bake division to emanate from an expansion of the distribution fleet in the first half of next year, reducing the reliance on outsourced distribution vehicles,” said IH Securities.
For National Foods, business will be anchored on clearing foreign wheat obligations, securing favourable raw materials, additional product innovations and improved efficiency across all factories.
National Foods has a debt overhang of $37,6 million it owes to foreign wheat suppliers.
On the other hand, Colcom is expected to enjoy an uptick as swine herd is projected to increase 25 percent from the first quarter of 2018 coupled with pie production capacity that doubled following the transfer of the pie manufacturing line previously managed under the Bakery division.
Innscor initially build its brand around fast food and grew to be a conglomerate with interests in distribution, furniture stores, confectioneries, appliances manufacturing, retail franchise, FMCG, poultry and crocodile breeding.
The conglomerate later configured its business with unbundling of the quick service restaurant business into Simbisa as well as unbundling of the specialty retail unit consisting of Distribution Group Africa, TV Sales and Home and newly acquired, Transerve into what is now known as Axia Corporation.
