Zambeef reports growth in annual profits despite prevailing economic hardships

ZAMBIA – Integrated cold chain food products and agribusiness company Zambeef reported a rise in full-year profit despite variations in the Kwacha contributing to a mixed revenue picture in what the food producer described as a “challenging year.”

In the year ended September 30, revenue was up 13% to ZMW3.13 billion from ZMW2.78 billion last year.

In dollar terms, revenue declined by 9.2% year-on-year to US$254.5 million from US$280.3 million.

Zambeef said: “The weakening of the Zambian Kwacha against the USD by approximately 24%, increase in the cost of fuel by 19%, together with constrained electricity supply that started in July 2019 due to reduced electricity generation arising from the low water levels in the Kariba Dam, impacted not only the Zambeef group’s performance but also our customers spending power.”

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Pretax profit rose 38% to ZMW38.7 million from ZMW28.0 million, or by 11% to US$3.1 million from US$2.9 million last year.

The company added, “The profitability was mainly driven by cropping, increased volumes and margins in the stock feed division and retail and cold chain food products which is in line with our strategic imperative of consistent revenue growth through expansion of our retail network.”

The company operates a chain of 226 retail outlets and it also produces and distributes beef, chicken, pork, dairy, eggs, fish, flour and stockfeed in Zambia, Nigeria and Ghana.

Output in its stockfeed operations rose year-on-year to 218,762 tonnes from 200,846 tonnes.

Zambeef said: “As we had anticipated, 2019 proved a challenging year for the group, driven by difficult economic and market conditions that impacted negatively on the group’s financial performance, particularly in the first half of the year.

“Set against this challenging macro-economic backdrop, the group’s results were reassuring, especially in the second half of the year.”

Looking ahead, the firm expects the tricky market conditions in Zambia, which is mired by a high national debt and electricity supply constraints, to continue hindering consumer confidence.

The Group has entered into a binding sale and purchase agreement with Chenguang Biotech (Zambia) Agri‐Dev Limited for the sale of Sinazongwe Farm, subject to the fulfilment of certain conditions precedent.

This disposal is expected to complete by March 2020 for a cash consideration of US$10 million.

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