INNSCOR Africa Limited's strategic business unit (SBU) Mill-Bake is expected to experience a significant uptick in sales volumes in the second half of 2024 and beyond, driven by a shift in demand towards local consumer staples, businessdigest can report.

However, the company's overall performance may be influenced by the interplay between sectoral dynamics, including the impact of low mining and agriculture output on disposable income.

“We anticipate the Mill-Bake SBU sales volumes to rise in the second half and in FY25 (financial year 2025) as demand moves back to importers and local consumer staples manufacturers like Innscor in response to the dismal grain output,” research firm Morgan & Co, said in its latest food and agriculture sector report.

“However, this could be offset by the impact of the mining and agriculture sectors' low output on disposable income, which could extend to Innscor's other SBUs that are relatively income elastic.

“That said, this will be upended by the agriculture sector's recovery in the second half of 2025.”

The group delivered a 20% growth in revenue in the six months ended December 31, 2023 compared to the same period in the prior year, largely driven by the Mill-Bake's bakery division's 23% sales volume increase.

Key to the growth was the softer wheat price. The protein SBU's divisions grew by between 4% and 8% as muted formal retail demand and exhausted capacity limited growth in key sub-divisions.

Growth in sales volumes in milk and soft drinks, driven by increased upstream capacity and production extensions, were the highlight of the beverages and light manufacturing unit.

The operating profit was weaker because of inflation-driven cost pressures and limited pass-through effects but this was offset by a lower interest expense and good performance from associate companies.

As a result, the net profit was higher than the prior period, albeit marginally.

The group's total assets grew by 13% during the period because of capex receivables.

Shareholders' value,  however,  grew  by 6% because of a 22% growth in payables.