LISTED milk processor, Dairibord Holdings Limited Zimbabwe (DHL) says it expects to exit Malawi in June this year and is in talks with potential investors to buy its equity in the subsidiary.
DHL purchased 60% equity into the Blantyre operations of the former State-owned Malawi Dairy Industries at privatisation in 1998. The government of Malawi retained 40% shareholding in the new company.
Dairibord Malawi (Private) Limited (DML) is the market leader in the dairy, foods and beverages industry in the country as a result of a joint venture between Dairibord Holdings and the Malawi government, but has experienced viability challenges of late.
DHL chief executive Anthony Mandiwanza told NewsDay that it was in discussion with a potential investor to buy equity to ensure that the company exits with value.
“As recently reported at the analyst briefing, we are in an exclusive discussion with a potential investor. To that extent, we are limited as to what we can discuss about our strategic decision to exit, suffice to say we have found a promising prospect which if the deal succeeds, Dairibord will exit with value. There are no other reasons other than that Dairibord are pursuing a value-preserving exit option,” Mandiwanza said.
He added that the company failed to capitalise its subsidiary due to foreign currency problems bedevilling the country.
“We reported last year at the annual general meeting that the board was considering exiting Malawi mainly because the parent company Dairibord could not capitalise the Malawi unit due to foreign currency shortages in Zimbabwe. That decision was approved by shareholders of Dairibord. We hope to conclude the divestiture by June this year,” he said.
The subsidiary posted a loss after tax of $700 000 in 2018, an increase of 17% on the prior year loss due to continued working capital constraints.
DHL recorded a 28% growth in revenue to $126,4 million for full year 2018, driven by volume growth and selling price adjustments.