ZAMBIA – Zambeef Products Plc, a prominent player in the Zambian agri-industrial sector, has recently unveiled its interim results for the second quarter of 2024.
Despite being a major player in Zambia’s cold-chain food and retail industry, the company faces challenges that have led to lower-than-expected financial performance.
According to the interim report, Zambeef anticipates that its revenue and gross profit for the fiscal year ending September 30, 2024, will fall approximately 15% below market expectations.
This downturn is attributed to operational setbacks compounded by the adverse impact of a depreciating local currency.
Additionally, the company expects its reported profit before tax to be approximately 30% lower than market projections due to higher-than-expected financing costs and impairment of an investment in an associate.
As a result, the reported profit after tax is forecasted to be roughly 55% below market expectations, including a loss from assets held for sale.
The first half of 2024 has proven to be challenging for Zambeef, as it struggles with a tough market and operating environment – factors such as constrained consumer spending, tight monetary policies by Zambia’s Central Bank to combat inflation and exchange risk, and limited government spending have all contributed to the company’s difficulties.
Moreover, macroeconomic instability stemming from delays in Zambia’s debt restructuring process has further exacerbated the situation.
A notable setback highlighted in the report is the impairment of Zambeef’s investment in Zampalm, in which the company holds a 10% equity interest.
The impairment is attributed to a reduction in forecasted gross margins for Zampalm, resulting in a 50% impairment in the interim results to March 31, 2024, and a total impairment expected in the full-year results to September 30, 2024, amounting to approximately USD1.4 million.
Despite these challenges, Zambeef remains a crucial player in Zambia’s agribusiness sector, boasting a diverse portfolio that includes primary production, processing, distribution, and retailing of various food products.
With operations extending beyond Zambia to Nigeria and Ghana, the company continues to navigate through turbulent times while striving to maintain its position as a leading player in the region’s food industry.
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