LISTED food manufacturer, National Foods (NatFoods) has bemoaned limited ZWG acceptability in raw materials sourcing on the back of calls for collaborative measures to shore up the local unit.
The Zimbabwe Gold (ZWG) is the official currency of Zimbabwe introduced on April 8 2024, backed by US$575 million worth of hard assets: foreign currencies, gold, and other precious metals.
After taking off on a high note at a premium of US$1:ZWG13,80, the local premium tumbled on the parallel market four months down the line, forcing the Reserve Bank of Zimbabwe (RBZ) to unilaterally devalue the local unit by a whopping 43%.
Presenting an annual report for the year 2024 this week, NatFoods decried limited ZWG acceptability in the markets.
“In addition, the market remains limited in its ability to transact with the ZWG, with many key commodities such as fuel, power, raw materials, as well as human capital and certain statutory payments, mostly requiring settlement in United States Dollars.
“Whilst the Group welcomes the addition of the ZWG to the multi-currency basket, the success of this initiative will be dependent on further supportive measures, which amongst other things, will allow users to seamlessly interchange between currencies; this will naturally result in greater market acceptance, and use, of the new local currency,” said the company.
However, during the period, total volumes for the year under review at 585,000 tons, were 6% above those recorded in the prior year, with the growth emanating largely from the Maize and Stockfeed divisions.
The strong performance in these divisions was offset by a decline in the Down packing division, where raw material prices in the rice category increased substantially following the export ban on rice exports out of India, as well as the imposition of VAT on the product in the local market.
Revenue for the current year at US$ 359.36 million was 5% ahead of that recorded in the prior year; the increase being largely in line with volume growth.
Gross margin in absolute terms increased by 13% to USD 81.64 million, driven largely by procurement and operating efficiencies, which resulted in a 3% reduction in the bill of materials on a per ton basis over the prior year; average selling prices across the Group declined by 1% over the same period.
