SWISS-based food giant Nestle has injected US$14 million into its Zimbabwean operations which will go towards new and ongoing capital projects this year, The Financial Gazette’s Companies & Markets (C&M) has learnt.Head of corporate communications at the firm’s local unit, Farai Munetsi, said the capital expenditure (capex) includes the construction of a new building to accommodate offices and a quality assurance laboratory at its Harare factory.
The company also plans to boost production capacity of its MILO processing plant and to install an underground water tank to increase water storage by more than five times.
“The ongoing capital investments at the factory are in the construction of a new building to accommodate offices and quality assurance laboratory and the upgrade of MILO processing area.
“In addition to this, an underground water tank is being installed and this will increase water storage more than fivefold. The water is essential for the production process and for fire protection,” said Munetsi.
The 2013 spending plans demonstrate the company’s commitment to pursue projects expected to provide profitable, long-term growth for shareholders.
The company sells its cereals on the domestic market.
Its Cerelac and Cerevita production has doubled due to the installation of a new processing plant last year.
The company plans to export the products to Zambia, Malawi, Moza-mbique, South Africa and the Democratic Republic of Congo.
“Cereals production capacity has doubled from last year since the installation of the new processing plant.
Production has increased as evidenced by the increase in the presence of all the cereal product ranges in the market place,” Munetsi told C&M.
“As cereals production and supply in the local market meets demand, more Cerelac and Cerevita would be available for export to the surrounding countries,” he added.
Nestle Zimbabwe’s results are consolidated in Nestle Equatorial African Region Limited’s results which consist of 21 countries.
These regional results are then consolidated into Nestle SA which finally publishes the results as a group.
The group’s financial results for the year to December 2012 slowed down in growth in emerging markets.
Its net profit of US$11,5 billion represents an increase of 11,5 percent on the 2011 performance, which was however slightly ahead of analysts’ forecasts.
Sales at the world’s top food industry player rose by 10,2 percent to hit 92,2 billion Swiss francs.
Nestle has been in Zimbabwe for over 50 years and currently employs around 203 permanent workers.
It also operates a factory in Harare producing milk powder.
The company in December 2011 launched a 10 year dairy empowerment scheme. By last year more than 500 dairy cows and heifers were distributed to farmers contracted to supply milk to the Nestle factory.
New entrants who are mostly small scale farmers have joined in the programme.
The scheme will source 4 000 dairy cows for both large and small scale commercial dairy farmers on contract with Nestle and farmers looking to develop small scale dairy projects.
During the first quarter of 2013, raw milk from dairy farmers has increased by an average of 10 percent compared to the first quarter of 2012.
“The 10 percent growth per year in milk deliveries is in line with the planned volumes growth over the plan period,” Munetsi said.