Zambeef (AIM: ZAM), the fully integrated cold chain foods and retail business with operations in Zambia, Nigeria and Ghana, today announces its unaudited interim results for the six months ended 31 March 2017. Below is an extract from the financial results.
The first six months of the 2017 financial year have seen the Zambeef business continue to grow, but margins have remained under significant pressure. Turnover for the Group increased by 3.5 per cent. in ZMW from ZMW1,122 to ZMW1,161m (19.8 per cent. in USD), while Gross Profit margins reduced from 40 per cent. to 33 per cent., resulting in Gross Profits reducing by 15.3 per cent. in ZMW from ZMW446m to ZMW378m (2.02 per cent. in USD).. The Group has tightly controlled its overheads despite the inflation rate starting the period at 18.9 per cent., and overheads increased by only 1.8 per cent. in ZMW (17.7 per cent. in USD). EBITDA margin reduced from 14.1 per cent. to 7.3 per cent., and operating profits decreased by 64 per cent. in ZMW from ZMW122m to ZMW44m (58 per cent. in USD from USD10.7m to USD4.5m)…
The highlight of this period was the strong 26.1 per cent. (in ZMW) sales growth in the Retail and Cold Chain Food Products division. Zambeef has firmly established itself as best-in-class in terms of its production and distribution of the Cold Chain Food Products delivering a very satisfactory EBITDA margin of 8.5 per cent. which compares favourably with benchmark returns across the cold chain foods and retail sector, in what has been a challenging macroeconomic environment.
The focus for the next six months will be on:
- Continuing to expand the footprint and sales of the Retail network, which will drive sales of our Cold Chain Food Production business and stock feed operations. (Eight Zambeef Macros and four Shoprite stores are expected to open before the end of the financial year);
- Commissioning the new Kitwe Cold Chain Food distribution hub which will increase capacity and improve distribution efficiencies in the Copperbelt and North Western Province operations (completion expected September 2017);
- Completing the expansion of the broiler breeding farms and hatchery to increase day-old chick production from 210,000 birds per week to 310,000 birds per week (completion expected end of May 2017);
- Expand the broiler processing operations to increase production by 30,000 birds per week to 160,000 birds per week (completion expected end of June 2017); and
- Commission the new stock feed plant at Mpongwe to bring an additional 140,000 M.T. of stock feed capacity on line (completion expected July 2017).
It will be a busy period but with an improvement in the macroeconomic environment Zambeef can expect to grow the business and improve margins over the next six months…
2017 March HY Financial Results (AIM).pdf
2017 March HY Results Presentation.pdf