November 28, 2016
Zambeef's regional growth strategy on track
Zambeef Products is on track with the growth plans it set out in 2014 to grow its business and increase volumes while maintaining margins, the company unveiled at a presentation of its annual results to shareholders on November 25.
The company delivered strong performance, recording 10.8% growth in cold chain sales volumes during the year to September 30, 2016. Profit after tax stood at K157.4 million (US$16,000) compared with a loss of K50 million (US$5,070) for the same period last year.
Joint chief executive officers Dr Carl Irwin and Francis Grogan attributed the positive growth to increasing volumes, maintaining margins and effective cost management. A reduction in debt gearing as a result of the US$65 million capital raised from CDC Group also helped company performance.
"We set out a clear strategy in 2014 which was to reduce gearing and concentrate on what we believe to what we're best in; our retail business and cold chain division which is the engine room that drives our growth," said Dr Irwin.
Zambeef further recorded a decrease in administrative costs as a percentage of turnover improved from 28.2% in 2015 to 25.7% in 2016 while Group debt reduced by 23.6% from US$72 million 2015 to US$55 million 2016 resulting in a reduction of gearing to 26% in 2016 from 60.3% in 2015.
"Zambeef has ended the financial year in a strong position. Through the efficient delivery of our strategic priorities, a platform has been created from which to continue sustainable long term growth. The balance sheet has been significantly strengthened as a result of CDC having made a substantial investment in the Group," said Zambeef Chairman Dr. Jacob Mwanza.
Zambeef successfully completed an equity investment amounting US$65 million from the CDC Group which saw the company take full control of the Zamhatch operations in Mpongwe. The investment has allowed Zambeef to focus its investment in growing its business, accelerating the roll-out of its new macro stores and expand its cold chain foods production capacity in order to meet the growing demand for its products, both in Zambia and in the surrounding SADC/COMESA regions.
"Our performance in the Cold Chain Food Products division for the year remains strong and this has been achieved through a market-driven strategy involving a continued roll out of new macro outlets across the country. Our commitment moving forward is to ensure that all our products are on our shelves, all the time for our customers," said Grogan.
Zambeef grew its total retail network from 154 to 171 outlets across Zambia as well as its West Africa operations in Nigeria and Ghana. An additional 10 new Macro and Novatek outlets are scheduled for a roll out over the next four years with an additional eight instore butcheries through its partnership with Shoprite.
"We are entering into a new era for Zambeef, and I am confident that the Group is well positioned to take advantage of the opportunities that lie ahead," concluded Dr. Mwanza.