LISTED agro-industrial outfit CFI Holdings Limited unrealised exchange losses on its foreign currency denominated loans and creditors increased to ZWL$139,5 billion in 2023, up 1 838% from the prior year.
Consequently, the group widened its loss before tax to ZWL$125,23 billion from ZWL$3,06 billion in the prior year, CFI chairperson Itai Valerie Pasi noted in a statement accompanying the group’s 2023 annual report.
“Expenses increased in real terms, as a consequence of these expenses being pegged by suppliers and service providers in US$ (United States dollar) but converted to ZWL (Zimbabwe dollar) at prevailing parallel market exchange rates,” she said.
“On the other hand, selling prices were determined in line with official exchange rates, which consistently lagged market rates.”
Group inflation-adjusted revenues for the year increased by 245,7% to ZWL$201,99 billion reflective of the mismatch between rapid inflation of the local currency during the year period as compared to the subdued official inflation statistics.
The group, according to Pasi, invested ZWL$2,29 billion into property, plant and equipment, mostly in company motor vehicles and recapitalised Victoria Foods plant spares, as well as centre-pivot irrigation equipment at Glenara Estates.
“The operating environment is forecast to remain challenging and complex in the medium term aggravated by the now prevailing El Niño-induced 2023/24 phenomenon. This is set to reduce agricultural output in the region,” Pasi said.
“Given that the agricultural sector is a mainstay to the group’s operations, proactive management practices will therefore be employed to ensure the group’s survival in these difficult times.”
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Overall, retail operations contributed 76,3%, while milling operations contributed 20,1% and farming operations accounted for 3,4% of group turnover.
Farm & City Centre struggled under the weight of a difficult operating environment, characterised by unstable multiple exchange rates, high interest rates and reduced consumer spending.
As a result, overall sales volumes for the entity’s key volume drivers fell by 15% from prior year. Following the announcement of the 2023/2024 drought caused by the El Niño phenomenon, the company noted that sales of key agricultural volume drivers such as fertilisers and chemicals are forecast to remain depressed.
The Glenara Estates established 550 hectares of white maize and 236 hectares of soya beans during the period. Table potato prices realised per kg declined by 8% relative to prior year due to a flood of supply to the potato market and a reduction in consumer buying power.
The Estate’s cattle breeding and pen fattening operations were maintained with reasonable success.
In February 2023, the Supreme Court ruled in favour of Crest Breeders International confirming the entity’s rights in Saturday Retreat Estate. The entity is seized with implementing its development strategy as the group looks to enhance its synergies with the retail unit and diversify its portfolio, Pasi said.
Agrifoods sales volumes increased by 31% from prior year on the back of improved raw material availability on the local market from a good 2022/2023 agricultural harvest. Agrifoods continues to reassert its presence in the market, and efforts to improve demand for its products are ongoing as the entity claws back its market share, CFI said.
Victoria Foods volumes declined by 14%, weighed down mainly by intermittent power cuts affecting production. Additionally, the maize mill was seriously affected by raw materials supply challenges during the period.
Apart from supply challenges, raw materials prices also rose from prior year levels, ultimately depressing the division’s financial performance.
Crest Poultry Group’s other units, Crest Breeders, Hubbard Zimbabwe and Suncrest Chickens, remained under care and maintenance during the period. Joint ventures leveraging the group’s poultry infrastructure and brands are still being pursued, the company said.
In the short to medium term, the group will prioritise continued investments in its milling operations to underpin its long-term competitiveness.
Long term focus remains directed towards the development of low-cost housing delivery in Harare South in support of the government’s Vision 2030 development goals.
“The group will, therefore, maintain its efforts to resolve all issues affecting its interests in its land banks to make way for progressive, orderly infrastructure deployment and service delivery to the various settlements,” Pasi disclosed.
