HARARE - As other Zimbabwean companies run for the covers, crocodile farmer, Padenga anticipates strong sales volumes in the second half to December, driven by higher sales volumes of the reptile's skins which are expected to rise to 46 000.
The global crocodile skins industry is estimated to be worth about $1bn, according to a report by the Financial Times. Global fashion and apparel companies Hermes and Louis Vuitton are among the largest clients for crocodile ranchers.
Padenga is hoping to tap further into this market and raise its share of the profits accruing from this market. It said the second half of the year would see it generating more revenue as the first half period was a cost accrual period.
“Shareholders are remained that the first half of the year is essentially a cost accumulation period with revenue largely coming in the second year,” Alexander Calder, chairman of Padenga said this week.
Profit before tax for the interim period to June amounted to $4.3 million compared to $2.7 million in the 2016 first half period. In the year to December 2016, basic earnings per share in Padenga rose to 1.65c after revenues increased to $31.1 million compared to $27.4 million.
Cash generated from operating activities amounted to $1.2 million while revenue for the period amounted to $3 million. Padenga received a $114 486 incentive, leading to basic earnings per share of $0.78 cents.
Padenga has managed to “maintain good relationships with foreign suppliers in respect of critical inputs” for its operations. This had helped it keep the crocodile farms running and helped enhance the quality of the skins harvested from the farms for sale on lucrative markets. A report, the Global Luxury Apparels Market (2017-2023) identified “factors driving the demand of luxury apparels market (as) growing disposable income of the consumers and rapid urbanization” across most economies.
“Additionally, growth in online selling and buying process of luxury clothes is also contributing to the growth of luxury apparels market. However, high cost of luxurious fabric is restraining the growth of luxury apparels market,” says the report.
Padenga, which owns Nile crocodile farms in Kariba in western Zimbabwe, is even expanding operations by building 80 more pens. It had sold 5 283 high quality skins during the period under review.
“Construction work for an additional 80 new pens is underway. This will significantly improve skin quality, increase growth rates and improve production efficiencies,” Calder said.
There was stock of about 4 773 skins by the end of June while profit in the Zimbabwe operation alone was about $5 million before tax compared to about $4 million in the prior year period. The alligator farming operation in Texas in the USA recorded a loss before tax of nearly $647 000, with the “rebuilding process for this operation” continuing.
The Tallow Creek alligator farm in Texas, United States, was impacted by Hurricane Harvey which occasioned heavy flooding but has emerged from the tropical storms with minimal damage and is now poised to carryover its stock for skin sales in 2018.
“Hurricane Harvey and attendant tropical storms ravaged Texas. The area where the farm is located was heavily impacted with significant flooding. There was minimal disruption to our farming operations,” Padenga said.
Profitability from the alligator farming operation which is being reconfigured to produce medium size skins “takes two years to produce positive results” and it is now expected that it will post a loss in the 2017 calendar year.
- BUSINESS REPORT