CFI Holdings in currency conversion-driven loss

Audrey Galawu

ASSISTANT EDITOR

Agriculture-based industrial holding company, CFI Holdings Limited, recorded an increase in expenses in real terms as a consequence of expenses being pegged by suppliers and service providers in USD, but converted to ZWL at prevailing parallel market exchange rates.

On the other hand, selling prices were determined in line with official exchange rates, which consistently lagged behind market rates.

The Group incurred unrealised exchange losses of ZWL$139.5 billion (2022-ZWL$7.2 billion) on its foreign currency denominated loans and creditors.

Consequently, the Group posted a loss before tax of ZWL$125.23 billion against a loss before tax of ZWL$3.06 billion from prior year.

The Group invested ZWL$2.29 billion (2022-ZWL648.8 million) into property, plant and equipment, mostly in company motor vehicles and capitalised Victoria Foods plant spares, as well as centre-pivot irrigation equipment at Glenara Estates.

CFI chairperson, Itai Valerie Pasi, said the operating environment is forecasted to remain challenging and complex in the medium term aggravated by the now prevailing EL Nino-induced 2023/24 phenomenon.

“This is set to reduce agricultural output in the region. Given that the agricultural sector is a mainstay to the Group’s operations, proactive management practices will therefore be employed to ensure the Group’s survival in these difficult times,” she said.

The group will prioritise continue investments in its milling operations in order to underpin its long-term competitiveness.

In its milling operations, the company recorded an increase in sales volumes by 31% from prior year on the back of improved raw material availability on the local market from a good 2022/23 agricultural harvest.

Agrifoods continues to reassert its presence in the market and efforts to improve demand for its products are ongoing as the entity claws back its market share.

Victoria Foods volumes declined by 14% weighed down mostly by intermittent power cuts affecting production.

Additionally, the maize mill was seriously affected by raw materials supply challenges. Apart from supply challenges, raw materials prices also rose from prior year level ultimately depressing the division’s financial performance.

Overall, retail operations contributed 76.3% (2022- 79.8%), while milling operations contributed 20.1% (2022- 18.0%) and farming operations accounted for 3.4% (2022- 2.2%) of the Group turnover.

The total indicative share trading liquidity for the company in the past 12 months as of February 3, 2024 is US$695.98 000 (ZWL$944.49 million).