- Revenue grew by 27%
- Gross profit increased by 33%
- Increased sales volumes drove profitability
Harare – The largest vertically integrated food for retailing brand in Zambia, Zambeef, posted a satisfactory performance for the half year period to 31 March 2020 despite a challenging economic environment that was further worsened by the uncertainties arising from the COVID-19 pandemic.
During the period under review, the Zambian Kwacha weaned by 37% resulting in short to medium term record inflation and together with a tight monetary policy, eroded customer purchasing power.
According to a half year results publication, revenue for the group increased by 27% to ZMW1 798 million compared to ZMW1 417 million registered in the same period last year while gross profit surged by 33% to ZMW626 million from ZMW471 million in the prior comparable period last year.
Zambeef achieved an operating profit of ZMW125 million, a 1003% surge from ZMW11 million recorded in the previous half year period.
The group said profitability was driven by increased sales volumes in the Cropping and Stock feed divisions coupled with pricing and cost optimization initiatives undertaken by management across the divisions.
However, finance costs increased by 33% in Zambian Kwacha due to rising Kwacha interest rates and the depreciation of the Zambian Kwacha against the US Dollar which resulted in increasing interest on the group’s US Dollar debt in Kwacha terms.
Administration expenses for the group increased by 9% from ZMW459 million in the same period last year to ZMW501 million in the current period, in the context of 14% inflation during the period.
The group therefore said, “As a result, the Group managed to generate a profit of ZMW2 million compared to a loss of ZMW32 million in the previous period.”
On the outlook, Zambeef anticipates the macro-economic climate to remain challenging but more stable in the second half of the financial year. However, the impacts of the pandemic still pose a significant risk to the business.
The group also expects moderate revenue growth across most of its product lines due to a slowdown in the economy, supported by anticipated good yields from the winter crops although, the full effects of an inflationary second quarter will be felt in the next half year.
The group is principally involved in the production processing, distribution and retailing of beef, chicken, pork, milk, dairy products, eggs, stock feed and flout.
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