Innscor on growth trajectory

By Melody Chikono | Nov. 1, 2022 | 3 Min read

Chicken inn

ZIMBABWE Stock Exchange (ZSE)-listed blue-chip Innscor Africa Limited says identification and analysis of the core functional business models within each operation will remain a key focus area for the group.

Despite the tough operating environment, the group is also looking at capitalising on the gains experienced and achieved over the past year and it remains positive that the growth trajectory will be sustained into the coming year.

In a statement accompanying financial results for the year ended June 30, 2022, the group said the 2023 financial year would be characterised by a considerable number of projects being commissioned across the group. This will enable an increase in production capacity as well as the addition of new product categories, significantly improving product quality and further enhancing production efficiencies.

“The complexities in the trading and economic environment have required management to continually innovate, by creating simplistic management reporting tools and techniques that can be applied in understanding and measuring real business performance,” it said.

“Significant emphasis has also been placed on identifying and analysing the core functional business models within each operation, with the aim of achieving operational excellence and deeper accountability across the entire group. This initiative will remain a key focus area in the period ahead. The group embarked on an ambitious US$70m investment programme in 2021, with this initiative having reached completion during the year, a further US$56 million of additional investment is planned for the forthcoming financial year.”

During the period, the group recorded revenue of $290,780 billion, a 49% increase on the comparative year underpinned by strong sales volumes across all core categories of the group’s business units.

However, the group said inflation-induced distortions became increasingly prevalent during the latter part of the year, reflected in the profit percentages increasing significantly.

Innscor’s improved sales volumes and product mix, coupled with a well-priced strategic raw material investment and enhanced production and overhead efficiencies resulted in an operating profit of $87,833 billion achieved for the year under review.

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This represented a growth of 251% over the comparative year.

“The net gains from the continued disposal of the group’s non-core businesses were recognised under financial income, while fair value adjustments on biological assets were also reflective of the inflationary distortions prevalent on the market during the year under review, with fair value adjustments on listed equities following a similar trend,” it said.

“The net interest charge for the year of $7,579 billion was 75% above that of the comparative year, and representative of elevated interest rates and higher ZW$-denominated loan values.”

Meanwhile, the group said the recent monetary policy interventions had resulted in local debt funding becoming unviable from a business model perspective, and having a pervasive impact on the group’s cost of capital.

As a result, the group said it had taken firm action to re-arrange its debt facilities as well as revise its working capital strategies in order to adapt to current market conditions.

This is expected to remain a key area of focus in the short to medium term.

“Given its size and the nature of the manufacturing cycle, the group is reliant on both shareholders’ equity and debt funding which it deploys, collectively, in the considerable working capital pipelines it needs to establish in order to ensure consistent supply of products to the market, and to ensure that its vast capital maintenance and expansion projects can be executed on,” the company said.