REG - Zambeef Products PLC - Trading Update

Zambeef ProductsAnnouncement

23/04/2024 14:30

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RNS Number : 7284L  Zambeef Products PLC  23 April 2024

 

ZAMBEEF PRODUCTS PLC

 

("Zambeef" or the "Group")

 

Trading Update

 

Zambeef (AIM: ZAM), the fully integrated cold chain foods and retail business
with operations in Zambia, Nigeria and Ghana provides the following update on
trading.

 

The Group announces that for the year ended 30 September 2024, revenue and
gross profit (reported in USD) are now expected to be c.15% below current
market expectations due to the underlying operational performance and
exacerbated by the translational effect of a depreciating local currency.
Reported profit before tax is expected to be c.30% below current market
expectations due to higher than expected financing costs and an impairment of
the investment in an associate. Reported profit after tax is expected to be
c.55% below current market expectations and this reflects the inclusion of a
loss from asset held for sale.

 

During the half year period to 31 March 2024, the Group endured a tough market
and operating environment amidst continued constrained consumer spending
exacerbated by the ongoing tight monetary policy of Zambia's Central Bank put
in place to address inflation and exchange risk, and constrained government
spending. Furthermore, albeit recent positive developments, specifically the
understanding reached by government with international bond holders around
debt restructuring, over the period the operating environment was marked by
macroeconomic instability stemming from delays in concluding the country's
debt restructuring process.

 

As the country grapples with the far-reaching adversities brought about by El
Nino; the worst drought since records began, adversely permeating through
various sectors crucial to the nation's well-being including agriculture,
water resources for power generation, health and social-economic stability,
our cropping division has not been spared the significant impact leading to
reduced crop yields. Additionally, with diminished water levels Zambia's hydro
power generation which accounts for 85% of electricity produced has resulted
in an aggressive load management programme by the national power utility
leading to the use of more expensive energy sources putting further pressures
on overheads. A combination of these factors coupled with the sustained
devaluation of the local currency beginning the financial year at K21.02/USD
and ending the period at K24.9/USD, have led to higher input costs across the
Group. Despite these headwinds, the demand for our products remained
resilient, demonstrating positive growth compared to prior year (in ZMW). The
strategic initiatives put in place, including optimized pricing across all
divisions, have helped to mitigate the impact of rising input and overhead
costs.

 

The impairment of the investment in an associate relates to Zampalm in which
the Group owns a 10% equity interest, and remains in operation. The impairment
reflects a reduction in the forecast Zampalm gross margin used in the
value-in-use calculation for the investment, with a 50% impairment expected to
be taken in the interim results to 31 March 2024, and impaired in full
(c.USD1.4m) in the full year results to 30 September 2024.

 

The Group expects its results for the half year ended 31 March 2024 to be
released by the end of June 2024. Shareholders are advised that the
information contained in this Trading Update has not been reviewed nor
reported on by the Company's external auditors.

 

 

 

For further information, please visit www.zambeefplc.com
(http://www.zambeefplc.com/) (http://www.zambeefplc.com/) or contact:

 

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

 

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 9.48m broilers and 25.4 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 are
planted twice a year, and a further 8,000 hectares of rainfed/dry-land crops
available for planting.

www.zambeefplc.com (http://www.zambeefplc.com)

 

 

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