- Shareholders to expect fall in profits
- Limited sales opportunities, depressed prices influenced the expected profits
Harare – Diversified ZSE-listed Padenga Holdings recently issued a cautionary statement to its shareholders, informing them of an expected fall in profits on the back of demand-side challenges throughout its 2020 financial year.
In its meat division, Europe is a primary export destination, while crocodile and alligator skin for luxury products are sold globally.
On the European front, Covid-19 related lockdowns led to the closure or restricted operation of food & beverage industry businesses.
Consequently, imports of Padenga’s meat from Europe are reported to have “collapsed completely”, with “no export sales achieved” in 2020.
Following a business model revamp post 2008 global financial crisis, Padenga shifted production efforts and investments in its crocodile and alligator skin away from a volumes-based approach and towards a high-end, premium quality product focus.
The strategical adjustment has yielded profitable years since its implementation, but has proven to be detrimental in an outlier year of Covid-19.
As a result, the company informed its shareholders of the “limited sales opportunities” and “depressed prices” seen in 2020; further influencing expected profits for the company.
In hindsight, the company’s USD 20 million, 50.1 percent acquisition of Zimbabwean gold mining firm Dallaglio Investments was an opportune capital injection.
It signaled the company’s first step towards portfolio diversification in an effort to expand its foreign currency-earning revenue streams while hedging against cyclical economic fluctuations that tend to catch myopic or undiversified investments off-guard. Credit must be given to the Padenga board for this venture and ones yet to be publicized.
Padenga and other ZSE counters were recently granted a 30-day respite for the publication of half and year-end financial reports by the ZSE. Padenga Holdings results for the financial year that ended on 31 December 2020 are therefore expected on or before 30 April 2021.
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