(HERALD) Dairibord raises stake in Malawi

Dairibord raises stake in Malawi
Friday, 12 August 2011 02:00
Business Reporter

DIVERSIFIED Dairibord Holdings Limited has increased its shareholding in Dairibord Malawi Limited to 68,4 percent. The ZSE-listed firm increased its interests in DML through the acquisition of 8,4 percent equity.

Group chairman Mr Timothy Chiganze told shareholders in the group's financial statement for the six months ended June 30, 2011 that the transaction was funded through a dividend declared by the company.

Other shareholders in the Malawi operations include National Investment Trust of Malawi, which controls 22,8 percent and the Dairibord Share Ownership Trust, which owns the remaining 8,8 percent.

Dairibord, which is expected to spend about US$7 million this year, says it is negotiating with ME Charhons major shareholders, Cairns Holdings to recapitalise the company, which is not operating viably.

During the period under review, ME Charhons contributed a loss of US$125 471 to the group, compared with a profit of US$1 869 from the same period last year.
"The funding plan for the company has been protracted, affecting the capitalisation of the company," said Mr Chiganze. "Discussions are currently underway with Cairns, the major shareholder in ME Charhons, to find a solution."

For the six months under review, Dairibord turned over US$42,4 million, representing a 35 percent growth compared with the same period last year.
Total operating costs grew 38 percent due to increasing costs.

Sales volumes for the period were 27 percent ahead of the same period last year driven by 40 percent growth in volumes of liquid milks, 42 percent growth in volumes of foods and 14 percent growth in beverages.

Reduced growth in beverage volumes was attributed to the late commissioning of the Cascade plant, which has now been commissioned.
The new Cascade plant is expected to contribute significantly during the second half of the year.

Mr Chiganze said during the period under review, exports remained depressed, contributing just 1 percent of total sales volumes as the group focused on the profitable domestic market.
"As product supply improves from the recently installed capacity, the group will re-open old markets and grow volumes," said Mr Chiganze.

He added that national raw milk production continues to increase and raw milk received by the group was 29 percent ahead of the same period last year.
Although monthly national raw milk production in Zimbabwe has increased to 4,2 million litres, this is still below consumer demand, estimated to be over six million litres per month.