Natfoods more than doubles profit

Despite the crippling drought which has affected half the country’s population, National Foods, one of the biggest milling companies in the country, says its sales volumes for the first half of this year were similar to those of last year.

It does not give any figures but it realised a net profit of $729.4 million, more than double the $339.1 million it made in the first half of last year.

This is despite the fact that the company has been adversely affected by price controls which were introduced in October last year.

Even in inflation adjusted terms it performed better than last year dropping from a loss of $543.9 million to that of $286.7 million.

Food companies generally tend to do well during droughts as people are forced to buy their products instead of relying on their own household stocks.

Sales more than doubled from $4.9 billion to $10.6 billion with gross profit also more than doubling from $1.3 billion to $3.1 billion.

The packaging division improved its throughput, margins and efficiencies.

The malt division also did quite well although it made a relatively small contribution to revenue.

Demand for flour was strong, but rationing of wheat led to a decrease in volumes sold.

Local oilseeds were in short supply so edible oil volumes dropped.

The agribusiness division was adversely affected by the land reform programme but the company says it will continue to play an active role in encouraging good animal husbandry.

The company says the second half will be influenced by the high level of inflation, the erosion of disposable incomes, the availability of foreign currency and the outcome of the land reform programme.

Rationing of wheat is expected to continue due to a smaller crop.

The supply of maize meal and flour will therefore depend on the ability of the government to import the grains for millers.

The company says it will also continue to be adversely affected by price controls but it says if sales volumes are maintained at present levels it could produce results that are comparable to those of the first half.

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