The Sunday Mail
Enacy Mapakame
LISTED agro-industrial firm National Foods is awaiting regulatory approval for its planned acquisition of a 50 percent stake in dairy producer Pangolin Products Limited.
Approvals are being sought from the Competition and Tariffs Commission, the Zimbabwe Stock Exchange and the Reserve Bank of Zimbabwe.
National Foods MD Mr Michael Lashbrook said pursuit of the dairy producer was part of the company’s portfolio diversification to ride out present economic headwinds.
“I prefer not to comment on the specific details until we have achieved all of those approvals; we will share the details once they are confirmed,” said Mr Lashbrook in an interview at the company’s AGM in Harare last week.
“We see the opportunity to bet on additional manufacturing units to National Foods, which can produce both synergy stake and new categories for us, so it’s a principle of what we are trying to do.”
Pangolin Products Ltd is owned by ProBrands Group, a growing food and stock-feed manufacturer.
The unit has key interests in the dairy sector, but there is not much information available about its operations.
Mr Lashbrook said National Foods Ltd was pursuing several opportunities that are at various stages of completion.
Market watchers contend that companies can best survive the current challenges through diversification, product innovation and acquisitions or mergers.
Companies are reeling from slow consumer demand and weakening global economic growth.
Forecasts that El Nino weather conditions will likely impact on the 2015/2016 summer cropping season could also affect Southern Africa’s agro-industry.
Mr Lashbrook told shareholders at the AGM that the group was sitting on a three-months’ maize deposit stock.
“We are working closely with all our stakeholders to ensure there are adequate supplies of maize for the current season and we anticipate to manage that through to the next harvest.
“As for our raw materials, which are topical given the current season with the El Nino coming, we are adequately covered with respect to wheat,” he said.
The company, through its contract farming initiative, produced 25 000 tonnes of wheat from 4 400 hectares of land. In the quarter to September 30, 2015 National Foods’ production volumes grew five percent from last year to 131 000 tonnes.
Revenues fell three percent from a year ago on flour price reductions.
The company’s planned capital expenditure for the year stands at US$9,9 million.
Of this, US$4,5 million is for revamping the flour business and US$2,3 million is for backup generators for Harare plants as a mitigatory measure against power shortages.
The remainder will be used for other projects.
“We are now on year two of our three-year programme to upgrade our flour mills and we are delighted with the success of the programme to date.
“We are seeing increased operational efficiencies and realising the benefits of this capex,” explained Mr Lashbrook.
National Foods Ltd’s shares closed unchanged at US$2,77 on Tuesday, its lowest in a year after touching a high of US$3,40 in the prior 52 weeks.
Year to date, the share is down 18,7 percent.
National Foods was established in 1920 as a milling concern and has grown to become one of the region’s largest manufacturers and marketers of food products.
