Zambeef – Full Year 2023 Financial Results

By Published On: December 7th, 2023Categories: Corporate announcement, Earnings

In accordance with the requirements of the Securities and Exchange Act No. 41 of 2016, Zambeef Products PLC announces its results for the year ended 30 September 2023.

Performance Overview

  • The Zambian economy grappled with significant challenges, creating a difficult operational and economic environment. Longer than planned sovereign debt restructuring, subdued mining production of copper, and the devastating impact of climate change; affecting crop yields and rainfall patterns, were primary drivers of this adversity. High energy prices and currency depreciation further impacted and worsened the operating conditions.
  • The local currency experienced notable volatility against the US Dollar, with fluctuations of up to 35%. This fluctuation was primarily driven by heightened demand for the USD, uncertainties surrounding debt restructuring, and a sustained increase in global interest rates, which affected offshore investor participation in local bond auctions. The ZMW/USD exchange rate commenced at K15.9 and concluded at K21.31, representing a 35% surge. Inflation, a critical economic indicator, concluded the financial year at 12%, as opposed to the previous year’s 9.9%. This was attributed to the depreciation of the currency, along with escalating food and energy prices, despite the persistent implementation of a stringent monetary policy by the central bank.
  • However, despite a tough operating environment, demand for the Groups products grew, bolstered by a customer-focused approach to pricing. The Group’s management team, through a concerted effort, prioritized both revenue maximisation, volume growth and cost management, thereby, positioning the group on the path to actualise its strategic goals.

Outlook

  • Looking ahead, The Group’s robust brand presence will continue to be a cornerstone in maintaining customer loyalty. Additionally, the vertically integrated business model places the business in a favourable position, ensuring a reliable supply chain and a strong market for its products. We anticipate a stabilisation in the economic environment once the process of debt restructuring concludes and there is an upswing in Copper production. With these factors in mind, the Group is poised to leverage the opportunities arising from a positive economic outlook, strategically investing for the future in anticipation of an upturn in consumer spending.
  • The Group’s commitment to consolidating its balance sheet through the disposal of low-returning assets and the expansion of capacity remains a central focus. These measures are geared towards enhancing shareholder value, a goal we remain dedicated to achieving. By fortifying its financial foundation and strengthening operational capabilities, The Group is poised for sustained growth and prosperity in the years ahead.

Key Financial Highlights

  • The Group achieved a revenue of ZMW 6.0 billion (USD 331.5 million), along with a gross profit of ZMW 1.8 billion (USD 101.0 million). This represents a year-on-year increase of 12.1% and 12.9% in kwacha terms, and 5.6% and 6.3% in US dollar terms, respectively. The Group’s performance was achieved on the back of strong volumes performance in Stock feed and Cold Chain Food Products.
  • Additionally, the Group delivered an operating profit of ZMW 361.4 million (USD 19.8 million), a significant increase of 108.1% in kwacha terms (96.0% in US dollar terms) compared to the prior year’s ZMW 173.7 million (USD 10.1 million). Although prior year was impacted by a one-off impairment cost of ZMW 141.8 million, this growth underscores the effectiveness of the Groups commercial strategy and the successful execution of key cropping project.
  • Finance costs increased by 31% which can be attributed to the extended utilisation of the overdraft and term loan facilities to supplement business growth and financing escalating working capital requirements.
  • Lower Soya yields and prices negatively impacted the results in the Cropping segment.
  • Management continued to optimize top-line growth through effective revenue management while upholding stringent cost control measures, positioning the Group on the trajectory to actualize its short to medium-term strategy.
  • The Group remains dedicated to fortifying its brand equity and providing customers with high-quality products. With its diversified and vertically integrated business model, robust brands, and effective management, the Group is well-equipped to seize future opportunities and navigate potential threats

Strategic Focus

The Board maintains its unwavering commitment to realizing the Group’s strategic objectives, even in the face of seasonal market dynamics and economic fluctuations. The five-year strategy focus areas;

  • Strengthen our core business by investing in capacity and grow market share
  • Crafting a tailored human capital strategy to meet the organizational needs.
  • Enhancing strategic partnerships to bolster our competitive edge and market position.
  • Divestiture of non-core assets.
  • Enhancement of shareholder value.

For further information, please visit www.zambeefplc.com or contact:

Zambeef Products Plc
Faith Mukutu, Chief Executive Officer
M’boo Mumba, Chief Financial Officer
Tel: +260 (0) 211 369003
Cavendish Capital Markets Limited (Nominated Adviser and Broker)
Ed Frisby/Abigail Kelly (Corporate Finance)
Tim Redfern/Barney Hayward (ECM)
Tel: +44 (0) 20 7220 0500
Autus Securities Limited
Mataka Nkhoma
Tel: +260 (0) 761 002 002

About Zambeef Products plc

Zambeef Products plc is the largest integrated cold chain food products and agribusiness company in Zambia and one of the largest in the region, involved in the primary production, processing, distribution and retailing of beef, chicken, pork, milk, dairy products, fish, flour and stockfeed, throughout Zambia and the surrounding region, as well as Nigeria and Ghana.

It has 236 retail outlets throughout Zambia and West Africa.

The Company is one of the largest suppliers of beef in Zambia. Five beef abattoirs and three feedlots are located throughout Zambia, with a capacity to slaughter 230,000 cattle a year. It is also one of the largest chicken producers in Zambia, with a capacity of 8.8m broilers and 22.4 million day-old chicks a year. It is one of the largest piggeries, pig abattoirs and pork processing plants in Zambia, with a capacity to slaughter 75,000 pigs a year, while its dairy has a capacity of 120,000 litres per day.

The Group is also one of the largest cereal row cropping operations in Zambia, with approximately 7,265 hectares of row crops under irrigation, which is planted twice a year, and a further 7,924 hectares of rainfed/dry-land crops available for planting each year.

By Order of the Board

Mwansa M Mutimushi
COMPANY SECRETARY

Issued: 07 December 2023


Full Year 2023 Financial Results (LuSE).pdf

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