TIDMZAM
RNS Number : 4621E
Zambeef Products PLC
30 June 2023
Zambeef Products plc
("Zambeef" or the "Group")
Interim results for the half-year ended 31 March 2023
Zambeef (AIM: ZAM), the fully integrated cold chain foods and
retail business with operations in Zambia, Nigeria and Ghana, today
announces its results for the half-year ended 31 March 2023.
Financial Highlights
Figures in 000's 2023 2022 % 2023 2022 %
ZMW ZMW USD USD
------------ ------------ ---------- ----------
Revenue 2,784,261 2,568,680 8.4% 158,738 148,136 7.2%
Change in fair value
of biological assets 484,630 381,567 27.0% 27,630 22,005 25.6%
Cost of sales (2,394,019) (2,096,854) 14.2% (136,489) (120,926) 12.9%
Gross profit 874,872 853,393 2.5% 49,879 49,215 1.4%
Administrative expenses (658,098) (597,097) 10.2% (37,519) (34,435) 9.0%
Distribution Expenses (68,801) (29,850) 130.5% (3,923) (1,721) 128.0%
Net impairment losses
on financial assets (449) - 100% (26) - 100%
Other (expenses)/income (47,950) 3,961 -1310.6% (2,734) 228 -1299%
Operating profit 99,574 230,407 -56.8% 5,677 13,287 -57.8%
Share of loss equity
accounted investment (1,415) (1,287) 10% (81) (74) 9.5%
Finance income - 113 -100% - 7 -100%
Finance costs (54,087) (58,413) -7.2% (3,084) (3,369) -8.5%
Profit before taxation 44,072 170,820 -74.2% 2,512 9,851 -74.5%
Taxation charge (14,405) (33,587) -57.1% (821) (1,937) -57.6%
Group income for
the year from continuing
operations 29,667 137,233 -78.4% 1,691 7,914 -78.6%
(Loss)/ Profit from
asset held for sale (10,654) 10,330 -203.1% (607) 596 -201.9%
Group income for
the period 19,013 147,563 -87.1% 1,084 8,510 -87.3%
EBITDA 229,377 310,422 -26.1% 13,078 17,902 -26.9%
Gross Profit Margin 31.4% 33.2% 31.4% 33.2%
EBITDA Margin 8.2% 12.1% 6.2% 12.1%
Debt/Equity (Gearing) 35.4% 14.9% 39.0% 14.9%
Debt-To-EBITDA 5.7 1.9 196.5% 6.9 1.8 153.6%
------------ ------------ --------- ---------- ---------- --------
PERFORMANCE OVERVIEW
The half-year period ended 31 March 2023 was characterised by a
difficult trading environment due to constricted consumer spending
amidst a tight monetary policy. This was further exacerbated by a
rise in the cost of key inputs and commodities which the Company's
operations rely upon. Compared to prior year comparative period,
the cost of maize purchased increased by ZMW80 million (USD 4.6
million), the cost of soya by ZMW25 million (USD1.4 million) and
the Company saw a sharp increase in agriculture inputs, by
approximately ZMW67 million (USD3.8 million). Key to note among the
various price increases was also the volatility in the price of
diesel, which in comparison to the previous period went up by ZMW
20 million (USD1.1 million). Invariably, these increased factors
impacted our cost of sales and these unanticipated increases could
not be fully passed on to the consumer and was contained by the
business.
The local currency experienced a steady depreciation against the
US Dollar with a sharp depreciation in March 2023 which resulted in
exchange losses of ZMW58 million (USD3.3 million). The key drivers
for the depreciation were the increased demand for the USD,
uncertainty over the debt restructuring and a sustained rise in
global interest rates affecting participation of offshore investors
in local bond auctions. The ZMW/USD exchange rate opened at K15.75
and ended at K21.31 (35% increase).
Despite the challenges highlighted, the Group posted volume
growth in most of its divisions as the momentum of the second half
of 2022 continued into the current period, aided by a meticulous
price moderation approach. The gross profit margin for the period
under review was 31.4%, a decrease of 1.8 percentage points from
prior year. The decline in gross margin despite a 9.2% growth in
revenue highlighted the impact of the escalation in our input costs
with cost of sales increasing by 39.1%.
The outbreak of Contagious bovine pleuropneumonia (CBPP) disease
towards the end of the last financial year continued to impact the
performance of our beef division in the current period.
The accelerated slaughter of cattle resulted in the depletion of
our cattle herd in the feedlot and, therefore, impacted supply at a
time when the Group aimed to build up cattle stock.
The Group generated revenue of ZMW 2.78 billion (USD 158.7
million) and achieved a gross profit of ZMW 874 million (USD 49.9
million) representing an increase of 8.4% and an increase of 2.4%
on the prior year comparative period in kwacha terms, and an
increase of 7.2% and decrease of 1.3% in US dollar terms,
respectively.
The Group delivered a half year operating profit of ZMW 99.6
million (USD 5.7 million), representing a decline of 56.8% in
kwacha terms (57.3% in US dollar terms), compared to ZMW
230.4million (USD 13.3 million) in the prior year comparative
period. Performance against prior year was impacted by
exceptionally higher price of soya beans and wheat in the prior
year from which the Cropping division benefited.
Finance costs reduced by 7.4% despite an elevated net debt
position owing to a reduction in exposure to foreign denominated
debt. The actions previously taken by the Group allowed for
reduction of currency risk.
The US$100 million expansion programme which commenced last year
is in progress with most of these projects expected to be concluded
in the coming financial year. This has resulted in an increase in
the Net debt to ZMW 1.4 billion (USD 67.4 million) at 31 March 2023
from ZMW 818 million ($45.3 million) at 31 March 2022. Of this
capex funding increase was ZMW 566 million (USD 32.2 million)
whilst working capital funding increase of ZMW 8.8 million (USD 0.5
million) primarily due to increased input costs.
Management continued optimising top line growth through revenue
management while the continued cost control measures positioned the
Group on the path to actualise its short to medium-term
strategy.
Commenting on these results, Chairman Mr. Michael Mundashi
said:
" The Group's performance demonstrates our ability to remain
resilient in the evolving market and illustrates the strengths of
our vertically integrated business model which is key to creating
long-term shareholder value.
The Board is committed to unlocking the value of its shares and
is actively engaging the Company's shareholder British
International Investments Plc, on the preference shares it
holds.
We remain excited as Zambeef remains well positioned to
capitalise on the opportunities ahead with the progress made in the
expansion of our cropping operation and investment in production
facilities."
Copies of Accounts the Interim Report for the half-year ended 31
March 2023 will shortly today be available on the Group's
website.
For further information, please visit www.zambeefplc.com
or contact:
Zambeef Products plc Tel: +260 (0) 211
369003
Faith Mukutu, Chief Executive Officer
M'boo Mumba, Chief Financial Officer
FinnCap Ltd (Nominated Adviser and Broker Tel: +44 (0) 20 7220
) 0500
Ed Frisby/Abigail Kelly (Corporate Finance)
Tim Redfern/Barney Hayward (ECM)
Autus Securities Limited Tel: +260 (0) 761 002 002
Mataka Nkhoma
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 7,263 hectares of row
crops under irrigation, which are planted twice a year, and a
further 7,830 hectares of rainfed/dry-land crops available for
planting each year.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
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END
IR KZGZVRLDGFZM
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