Padenga targets increased quality skins sales

Business Reporter
LISTED crocodile skins and meat producer, Padenga Holdings is targeting to sell 55 000 quality skins this year from its Zimbabwean operations compared to last year’s, 41 450 skins.

In its 2019 annual financial report released last week, Padenga Holdings said that local business operation was the mainstay.

“The Zimbabwe operation is projecting to sell 55 000 premium quality skins in financial year 2020, further extending its opportunity to expand its customer base.

“Demand for defect free skins remains strong and prices are anticipated to hold as long as the quality expectations of the premium market are satisfied,” said Padenga.

Crocodile skins and meat from Padenga’s Zimbabwe operation are exported to Europe and Asian markets to countries such as France and China.

The company said although it was closed for the better part of March and April, French tanneries were anticipating to re-open and product supply has thus far, not been interrupted.

“Chinese markets for luxury products have re-opened after their Covid-19 shutdown and European markets are anticipated to follow as full economic recovery begins.

“We forecast this operation will record growth in FY20,” it said.

Locally, Padenga owns Kariba, Nyanyana and Ume crocodile farms, all in Mashonaland West province while outside the country it has operations in the United States of America. The Zimbabwe crocodile operation is the group’s flagship. The local operation contributed 88 percent of the group’s revenue.

“Turnover was down by 25 percent from US$34 million to US$25,5 million in the period under review.

“Volumes were down by six percent. We sold 41 450 skins in 2019, compared to 44 253 sold in the previous year,” said the group.

“However, we closed the year with 7 729 skins in stock that will be sold in FY20.

“Operating profit and profit before tax declined by 18 percent and 30 percent to US$10,1 million and US$9,6 million respectively.”

The group said during the period under review, it committed significant resources towards producing the quality of skin desired by its principal customer.

“In the crocodile operation 47 752 animals were harvested, which was four percent above budget.

“This number included skins in +40cm sizes that due to changing market dynamics were surplus to the customer’s requirements and consequently have created the opportunity for the sale of Padenga skins into alternative markets,” it said.

The crocodile skin and meat marketer said the quality grade of 81 percent Grade 1 skins achieved was below the 89 percent that was achieved in FY18.

Monthly harvest totals were low at the beginning of the year as the harvestable crop was retained to meet increased quality demands. Some animals in particular size ranges were in fact held over for harvesting in Q1 of FY20 to fulfil the customers’ requirements.

“The scrutiny by customers at sales grading was intensified in an effort to try and identify those miniscule defects that could potentially only appear on the finished skins,” said Padenga.

The group is collaborating with several globally accredited academic institutions on initiatives to eliminate the viral challenges that contribute to skin quality downgrades.

“There is positive improvement evident from the proportion of skins selected for premium handbag production and we anticipate this to continue as the FY19 skins delivered are tanned,” he said.

In the 2019 financial year, Padenga closed the period with a total of 156 911 grower crocodiles on the ground compared to 162 672 at the end of 2018.

“This number of crocodiles was consistent with our strategy to achieve a sustained annual production of 46 000 skins,” it said.

A total of 495 pens were resurfaced in the period under review. This is a major part of management initiatives to constantly enhance skin quality, increase growth rates, achieve animal welfare compliance and improve efficiencies.