November 26, 2013

Zambeef announces 10% gross profit rise for year ended September 2013

Zambeef announced its results for the year ended September 30, 2013, posting an 18% growth in revenue to US$300 million from US$255 million in 2012, and a 10% rise in its gross profit to US$104 million against US$94 million in 2012.

The company's earnings before interests, taxes, depreciation and amortisations showed a drop of 19% to US$22 million as compared to US$27 million during the previous year. The adjusted pre-tax profit was also down 63% to US$6 million versus US$15 million in 2012.

There was also an increase in the Group's overhead expenditure, impacted by the removal of the Zambian fuel subsidy together with higher labour costs due to an increase in the statutory minimum wage. Despite the above challenges, it was encouraging to see the business return to cash generation.

Zambeef has also continued upgrading its retail outlets, with 20 being refurbished during fiscal year 2013. Crushing resumed at Zamanita's refurbished plant, with an increased annual capacity of 100,000 tonnes. Crop yields continued to improve across Zambeef's farms, led by Mpongwe and joint venture arrangements put in place with Rainbow to facilitate future expansion of the Group's poultry operations.

Zambeef's Chairman Jacob Mwanza, said: "2013 was a challenging year for Zambeef as the group sought to respond to, and address the consequences arising from concerns surrounding imported beef products together with upward pressure on general overhead expenditure. Notwithstanding these challenges, it is heartening to see revenues continue to increase at the same time as the directors prepare the business for future growth across a number of divisions. A key financial highlight this year has been to return the business to positive cash generation, which is in line with the strategy set out when Zambeef listed on the AIM Market of the London Stock Exchange in June 2011. The focus on managing controllable costs continues to drive efficiency savings where possible, leaving the business well positioned to target future bottom line growth."

The Zambeef Group is one of the largest integrated agri-businesses in Zambia, involved in the primary production, processing, distribution and retailing of beef, chickens, pork, milk, eggs, dairy products, fish, flour, bread, edible oils and stock feed, throughout Zambia and the surrounding region, as well as Nigeria and Ghana. It is also one of the largest cereal row cropping operations in Zambia and is also in the process of rolling out its West Africa expansion in Nigeria and Ghana, as well as developing a palm project in Zambia.