Covid-19 hits Padenga’s crocodile business

Source: Covid-19 hits Padenga’s crocodile business | The Herald

Covid-19 hits Padenga’s crocodile business

Enacy Mapakame
Crocodile breeder, Padenga Holdings Limited, has warned of a significant fall in profitability for the year to December 31, 2020 relative to prior year due to the negative effects of the Covid-19.

Since last year, global economies have been at various levels of lockdowns, which caused supply chain disruptions due to movement restrictions.

Most countries closed their borders as part of efforts to limit the spread of the pandemic, which had an adverse impact on businesses.

For Padenga, which is an export oriented company, said the pandemic has had an adverse impact on sale of crocodile skins to its key markets in Europe.

“The board of directors of Padenga Holdings Limited wished to advise shareholders of a material change in the group’s profits for the 2020 trading year.

“The group’s crocodile and alligator businesses have been impacted by market dynamics resultant from the Covid-19 pandemic and in particular a softening of international markets for luxury exotic skin products resulting in one of the most depressed trading environments ever,” said chairman Mr Thembinkosi Sibanda in a profit warning notice to shareholders.

The warning is a precursor to the financial results to be released at a date to be announced.

Mr Sibanda indicated that there were limited sales opportunities for skins not meeting exacting quality standards and when found, sold at very depressed prices particularly for alligator skins from the United-States-based subsidiary, Tallow Creek Ranch.

The closure of restaurants across Europe due to Covid-19 induced lockdown also meant that demand for crocodile meat collapsed completely and no export sales were achieved in the period.

However, management still remains upbeat of recovery post pandemic.

“Notwithstanding these challenges, both businesses were able to sustain skins supply contracts with premium customers at a time when most crocodilian operations worldwide had no viable market and have ceased production.

“We believe that our customers will be at the forefront of the market recovery post Covid-19,” said Mr Sibanda.

Padenga is also pinning its hopes on its newly acquired mining operations — Dallaglio — which has so far met production and revenue expectations during the period.

The group expanded its businesses into gold mining in a move expected to diversify risk and boost its export earnings.

Earlier in a trading update for the third quarter to September 30, 2020, indications were that the group’s consolidation of mining operations enhanced revenue performance for the quarter offsetting difficulties caused by Covid-19 to its crocodile skins business.

A trading update for that quarter showed revenue went up 221 percent with the mining operations accounting for 70 percent of that.

During the nine months to September, Dallaglio’s gold sales volumes went up 20 percent to 544,2kg from 452,8kg in the prior comparable period as gold spot price firmed 27 percent to US$1 735 year to date.

On the other hand, the crocodile and alligator businesses were negatively impacted by Covid-19 pandemic with no meaningful turnover being recorded since April 2020. Revenue from skin sales was 5 percent below prior period.