Fast food giant, Innscor’s investment in National Foods, one of the biggest milling companies in the country, is beginning to pay off.
In its report for the six months to December, Innscor says its shareholding in National Foods, which increased from 26 percent to 35.89 percent in November, contributed substantially to equity accounted earnings of $12.3 billion and also towards the group’s profit after tax of $40.4 billion.
Innscor’s turnover for the six months rose from $23.8 billion in December 2002 to $195.3 billion nearly three times the total sales for the year ending June 2003 which stood at $78.7 billion.
The company had an operating profit of $46.3 billion, up from $5 billion and net profit of $33.3 billion.
It had a net profit of $2.2 billion in the six months to December 2002 and that of $14.6 billion for the year ending June 2003.
The company says though declining disposable incomes and price increases put the Food business under pressure, the sector still managed a 641 percent growth in turnover. Operating profit was up 816 percent.
It says its strategic investment in local wheat enabled its bakery business to produce bread at a more affordable price. It reduced the price of bread which had shot up to around $3 000 a loaf to $2 200.
There was real growth in the Non-Foods sector with sales going up by 662 percent and operating profit by 848 percent.
There was real volume growth in Capri Appliance, Kodak Photo and the Credit Retail business.
Crocodile operations had a late start. Exports will only take place in the latter part of the financial year.
The Distribution sector benefitted substantially from the new Colgate Palmolive agency. Turnover grew by 830 percent and operating profit by 858 percent.
Four more stores were added to the Spar franchise, bringing the total to 49. Spar also opened a store in Zambia in December, its “first step” into the region.
Innscor says it streamlined its operation in Zambia, Mozambique, Kenya and Ghana. These operations generated sales of US$7.6 million. Though Ghana and Zambia are operating profitably, overall the region reported a loss of 40 cents a share.
The Franchising business opened 31 additional counters, four in Mozambique, 25 in Ghana and two in Angola. The franchising operation services 151 counters in Zimbabwe and 125 in the region.
The company says it will continue with its regional expansion with the addition of 41 counters on 14 food sites. It is planning to establish a distribution business in Malawi.
It says the new monetary policy has positively supported manufacturing operations as it had the effect of stabilizing the liquidity crisis.