National Foods more than doubles profit

It’s a tale of woes. Volumes down by 10 percent. Supplies of raw materials reduced by 60 percent. But food companies usually thrive during droughts.

Despite price controls on most of its products, National Foods, one of the country’s largest milling companies, still managed to more than double its net profit from $1.2 billion to $3.4 billion during the year ending December.

Sales increased from $12.8 billion to $28.3 billion with operating profit increasing from $1.8 billion to $5.2 billion.

The company says volumes were down by 10 percent largely due to shortage of raw materials.

Price controls on most of its products had worsened the situation as this had resulted in a thriving parallel market because most of its products were sold at controlled prices but offloaded at significantly higher amounts by vendors.

Wheat rationing introduced in May 2002 had seen wheat supplies reduced by 60 percent. Weekly rations had been reduced since then resulting in shortages of flour.

The agrarian reform programme had also adversely impacted on the company as the commercial cattle herd, especially the beef herd, had almost been decimated.

The poultry industry had been affected more by price controls than land reform.

The packaging division, however, had a good year since its products were not affected by price controls.

It was, however, affected to some extent by price controls on some products such as fertiliser and cement as there was a downturn in the production of these commodities.

The company, which was part of the Anglo-American empire in Zimbabwe, now has a significant indigenous ownership.

Amzim sold 21 percent of its stake to a consortium of indigenous businessmen through their company Takepart Investments.

It retains another 21 percent with Tiger Brands owning 19 percent and Old Mutual 12 percent.

Amzim has pre-emptive rights on its stake in favour of Tiger Brands.

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