ZAMBIA –Zambeef Products PLC, a food products and agribusiness company, posted a 4% decline in revenues to US$118.8 million for the six months to March 31, 2019 amid a challenging operating environment.
Zambeef plunged into a pre-tax loss of US$2.5 million compared to a pre-tax profit of US$2.8 million the year before.
The company’s earnings before interest, tax, depreciation, and amortisation (Ebitda) margin – a measure of a company’s operating performance- also declined to 5.8% from 10% a year before, leading to a 46% fall to US$6.8 million.
However Zambeef said that since the end of the year, margins have improved and revenue growth has returned, reports Morningstar.
“Significant fiscal pressures on the Zambian economy during the period have presented challenges for the market and impacted the disposable income of Zambeef’s customers,” said Chair Jacob Mwanza.
“Exchange rate movements have not favoured the group in the period and the depreciation of the currency has led to the group reporting realized exchange losses.
“Despite the tough trading conditions, the management team have continued to deliver on the group’s key strategic initiatives throughout the period and the second half of the year is expected to see an improvement in both revenue and margin performance,” he added.
The company which operates in a number of countries internationally, saw its Zambian retailing operations record 15% rise in revenue to US$67.12 million (ZMW882m) supported by increased stockfeed, edible oil, and flour sales.
However, an imbalance between sales of high and lower margin products led to an 8% fall in gross profit to US$6.39 million (ZMW84 million).
Looking ahead, Mwanza said “The macro-economic climate is anticipated to remain challenging. However, I am confident the group will perform well in the second six months to September 2019, with continued growth in revenue and gross profit margins.”
Zambeef has also continued to build up on the momentum of its macro rollout marked by recent opening of new outlets including in Chaisa and Kitwe as well as a new distribution and processing centre in the northern region.
The company said that the expansions will also integrate a decentralised system for all the inter-town retail centres from a strategic regional location- which has subsequently necessitated the realignment of its supply management.
The agribusiness company is involved in the primary production, processing, distribution and retailing of beef, chicken, pork, milk, eggs, dairy products, fish, flour and stockfeed in Zambia Nigeria and Ghana.