Dairibord Profit Surges on Lower Finance Costs, st...

Dairibord Profit Surges on Lower Finance Costs, strong Sales

Zim Now Writer

Dairibord Holdings Limited recorded a significant increase in profit after tax to US$3.77 million for the financial year ended December 31, 2024, driven by a 70.33% reduction in finance costs.

This marks a substantial rise from the US$1.02 million reported in 2023.

Despite facing financial headwinds from new legislative and regulatory measures, Dairibord successfully implemented cost-saving strategies.

Chairperson Josphat Sachikonye noted that the company navigated challenges such as the sugar content surtax, fiscal policy adjustments—including the value-added tax reclassification on milk products—and the increased Intermediated Money Transfer Tax on foreign currency transactions.

By streamlining raw and packaging material costs, the company achieved a 30% increase in gross profit, reaching US$31.73 million.

Dairibord’s significant drop in finance costs was a key factor in its profitability surge. Exchange losses on foreign currency-denominated loans fell from US$8.44 million in 2023 to US$1.76 million.

Additionally, interest expenses decreased from US$1.85 million to US$1.29 million as the company secured lower-interest loans and retired more expensive debt.

“The notable reduction in finance costs was largely due to a decrease in exchange losses, coupled with strategic loan management,” Sachikonye explained.

“Despite macroeconomic challenges, we posted a profit of US$3.77 million, a marked improvement from US$1.03 million in the prior year.”

Revenue for the period under review rose to US$126.63 million, an 18% increase from 2023. This was supported by a four-percentage-point increase in US dollar sales volumes, which accounted for 83% of total sales, up from 79% the previous year.

Overall, Dairibord experienced a consolidated volume growth of 10%, primarily driven by a 20% rise in liquid milk sales, fuelled by an increased raw milk supply and market share gains for brands like Chimombe, Steri, and Lacto.

A 47% surge in food sales volumes, with Yummy yoghurt, ice cream, and Rabroy Tomato Sauce leading the growth, a 1% increase in beverages, tempered by pricing challenges linked to the sugar tax and VAT adjustments, which affected Pfuko Maheu’s performance.

The company improved its liquidity, ending the period with US$1.43 for every dollar of short-term debt. However, working capital deficits arose due to delayed payments from critical debtors, leading to a higher expected credit loss allowance as of December 31, 2024.

To enhance liquidity, Dairibord is focusing on accelerating inventory turnover, shortening the cash operating cycle, and tightening credit risk management to mitigate customer defaults.

Sachikonye reaffirmed the company’s commitment to sustainable growth, stating, “We are dedicated to optimizing our operations while expanding our regional footprint to ensure long-term profitability.”