- Profit after tax dropped by 108% to ZMK15.489 million
- Volumes grew by 4%
- Total revenues grew by 5% to ZMK913, 846 million
Zambian breweries recorded a drop in profit before tax for the half year period ended 30 June 2020 on the back of the COVID-19 pandemic induced harsh operating environment.
In a half year results publication, the company said total volumes grew by 4% largely driven by affordable beer brands.
“Customers favoured the affordable segment over core and premium brands as their disposable income was eroded by the difficult economic conditions,” reads part of the statement.
Despite a modest 4% volumes growth, the company experienced a significant short fall of 10% against budget.
Total revenues grew by 5% from ZMK870,681 million to ZMK913, 846 million owing to volume growth and lower excise tax on the affordable beer segment.
However, profit after tax plunged by 108% to ZMK15,489 million from ZMK192,953 same period last year.
Meanwhile, profit before tax plunged by 16% to ZMK68,319 million.
The brewer said the loss was because of the significant unrealized foreign exchange loss that the business recognized following a revaluation of an outstanding group debt which was in response to the massive devaluation of the Kwacha in the first quarter of 2020 to reflect the correct value of this debt position.
Furthermore, the company said pressure on profit before tax was due to an increase in cost of production driven by the weak exchange rate, which was reflected in the 16% drop in current year gross profit.
The business remains liquid with a positive cash position of ZMW 185.8 million.
Equity Axis News