• Zambia Forestry Corp delivers strong financial performance in 2022
• Revenue increased by 5.3% driven by sales of treated poles
• Gross profit margin improved to 75% in 2022

Harare- Zambia Forestry and Forest Industries Corporation PLC has released its full-year results for the year ended 31 December 2022, showing a resilient operational and financial performance despite headwinds in the rough market environment. The corporation's continued attainment of quite strong performance in the year under review was due to the easing of COVID-19 pandemic restrictions and the efforts to mitigate the impact of COVID-19 pandemic by the government, coupled with the execution of robust strategies.

In terms of financial results, the gross profit for the year was ZMW288.6 million ($16.3 million) compared with ZMW251.1 million ($14.2 million) in the prior year, representing a growth of 15%. The gross profit margin in 2022 was 75% compared with 69% in 2021 due to the improved efficiency in the production of treated poles and the lower revalued pine stumpage based on the latest forest inventory results. The net profit for 2022 was ZMW2.5 billion ($141.6 million) compared with ZMW1.8 billion ($101.8 million) in 2021, driven by the gain from the fair valuation of the corporation's biological assets.

The corporation planted a total of 3,319 hectares of land with pine and eucalyptus, representing a reduction of 1,888 hectares compared with 2021 because of scaled-down expansion as the corporation mobilizes more financial resources to sustain future expansion. On 31 December 2022, Eucalyptus and Pine trees comprised approximately 54,482 hectares, ranging from newly established plantations to plantations that were 58 years old.

The corporation generated a total revenue of ZMW386 million ($21.9 million) from the sale of roundwood and treated poles compared with ZMW366.6 million ($20.7 million) in 2021, representing an increase of 5.3%. The positive performance was largely driven by the increase in sales of treated poles arising from the growth in the corporation's market share as well as a strong performance across all business and operational segments.

The operating expenditure (inclusive of expected credit losses) incurred in the year under review was ZMW405.5 million ($23 million) compared with ZMW361.2 million ($20.4 million) in 2021, representing an increase of 12.3%. The increase in costs was largely due to adverse microeconomic conditions such as volatility in the price adjustments of fuel. Total assets increased to ZMW6.1 billion ($346.2 million) as of 31 December 2022 compared with ZMW3.2 billion ($181.1 million) in 2021, mainly attributed to the revaluation of the biological assets as well as investments in plant and equipment.

The increase in shareholders' funds to ZMW5.4 billion ($306.3 million) as of 31 December 2022 from ZMW2.8 billion ($158.6 million) in 2021 was mainly attributed to the revaluation of the biological assets and increase in profitability. The liquidity position in 2022 remained strong, closing with a positive working capital of ZMW106.1 million ($6 million), implying that the current assets were more than adequate to cover the corporation's short-term obligations.

Looking forward, the corporation will continue to achieve consistent positive results in the implementation of the corporation's strategic plan 2020-2024. The board will review and realign the corporation's strategies to the new trends that have emerged to deliver better outcomes for the business. To adapt to the evolving market trends, maximize revenue and enhance business value, the corporation will implement strategies that continue to uphold its values, purpose, and pursue projects that will lead to sustainable growth of the business. The corporation will ensure that it channels its effort to the achievement of business growth, mechanization for improved efficiencies, and value addition for business sustainability.

In terms of competition, Zambia Forestry and Forest Industries Corporation PLC faces both local and international competitors. Local competitors include Zambezi Sawmills and Forest Plantation Limited, while international competitors include South Africa's Sappi Limited and Botswana's Batswana Timber Industries. The corporation's strong performance in the year under review is a positive sign that it can compete effectively in the sector. However, it will need to continue implementing robust strategies to maintain its market share and profitability.