National Foods plans $10mln capex for FY16

National Foods plans $10mln capex for FY16

HARARE, November 19 (The Source) – Agro-processing firm, National Foods Holdings, is expecting to spend nearly $10 million in the 2016 financial year with the bulk of the funds going towards plants upgrade, a senior company official has said.

Michael Lashbrook, National Foods chief executive told shareholders at the company’s annual general meeting in the capital on Wednesday that the major chunk of the capital expenditure would be channelled towards plant refurbishments in the flour division where $4,5 million  will be spent.

“In addition, National Foods will be investing $2,3 million to purchase generators to  provide back-up power supply to some of its major manufacturing sites,” he said.

The company is in the second year of a three-year programme to upgrade the flour mills, a project Lashbrook said was progressing well.

“We continue to invest further in the growth and up-skilling of our people.  This year, as one of a number of initiatives, two young millers will be sent to the Swiss School of Milling, the world’s leading milling school,” he added.

In a trading update for the quarter to September 2015, the Innscor Africa associate reported a subdued performance as the company priced aggressively to stimulate volumes.

Lashbrook said volumes for the period were at 131,000 metric tonnes, showing a five percent increase compared to last year, while revenue at $78,3 million was 3,2 percent below corresponding period in 2014.

“The reduction in revenue on increased volumes was primarily due to reduced selling prices for flour – on the back of lower wheat prices – and increased maize meal sales in the mix,” he said.

He added that the company continues to be well covered in respect of its various raw material requirements as it is currently holding three months usage of maize stocks.

“Some 25,000 metric tonnes of local wheat is now being delivered from the just ended winter wheat season. This wheat was grown on a contract basis in partnership with PHI Commodities. A further 5,000 hectares of maize and soya beans will be grown under contract in this year’s summer season,” he said.

Lashbrook said the company would continue to seek both organic and acquisitive growth opportunities.

“There are a number of growth opportunities which the company is working on and these are at various stages in terms of governance and regulatory approvals.

“In terms of the outlook, the company sees continued and fierce competition for the consumer dollar.  Management’s key focus remains to continue to drive revenue while continuously pursuing opportunities to optimise the company’s cost base,” he said.

In addition to Innscor, which holds 37.82 percent of its stock, National Foods shareholders include South Africa’s Tiger Foods Brands with a 37.45 percent stake and its workers trust with  9.85 percent shareholding.