Zambeef Products Plc has reported a 56 percent rise in profit for the first half of its financial year, boosted by increased sales in its core meat business.
The agribusiness conglomerate made a profit of K75 million before interest, tax, depreciation and amortisation (EBITA) in the six months to March 31, 2015, up 56 percent compared with the same period of last year.
Zambeef attributed the rise in earnings to strong sales of its cold chain meat and dairy products and continued tight control of administrative costs. The rise in profit was despite a 22 percent depreciation of the kwacha against the US$ dollar during the period.
“Zambeef has taken a number of large steps forward. The financial performance is significantly up on the same period in the previous financial period while Zambeef also concluded the sale of its subsidiary company, Zamanita Ltd, in line with the strategic aim of unlocking value and capital gains from within the Group and reducing the dollar gearing of the business,” said chairman Dr Jacob Mwanza.
The company also reiterated its strategic priorities: to expand the production, processing, distribution and retailing of meat and dairy products in Zambia; unlock value and capital gains from within the group and reduce dollar debt and gearing; to forge strategic alliances and partnerships with acknowledged industry leaders; and to develop the business into a regional food supplier.
“With Zambeef operating in some of the fastest growing parts of the world where both populations are increasing and real incomes growing, the demand for food will continue to show strong growth.
Zambeef has a clear intention to be an important player in meeting this increased demand for food products. With the disposal of Zamanita, we are pleased that management will be able to pay increased focus on driving the core business of Zambeef, which is the production, processing, and distribution of cold chain meat and dairy products. In addition the disposal of Zamanita will reduce dollar gearing and hence make our earnings less susceptible to rapid exchange rate movements,” said Dr Mwanza.
Joint chief executive officers Carl Irwin and Francis Grogan told shareholders: “Increased focus on Zambeef’s core business, which is the processing, distribution and retailing of cold chain meat and dairy products, has seen strong growth in these business units. Looking at beef, chicken, pork, milk, eggs and fish combined the gross profit has increased by 48% (US$29%). This part of the business will remain a priority in terms of capital expenditure and management focus. New projects being worked on include a new processing and distribution hub in Kitwe as well as wholesale depots in Solwezi, Mongu, and Lusaka.
Zambeef also reported that the business was strongly cash generating with net cash inflow before financing increasing by 171 percent to ZMK61 million.
The new hatchery, breeder farm and stock feed plant being erected at Mpongwe Farm, as a joint venture with RCL Foods Ltd of South Africa, is progressing well. The first day old chicks will come on line in September 2015 and start at around 220,000 chicks per week increasing to 320,000 chicks per week over a 12 month period. The new stock feed plant should be operational before the end of the financial year. This project will take Zambeef’s chicken operations to a new level and the benefits from this will start flowing through during the 2016 financial year.