The Board of Zamefa forecasts a stronger earnings per share for the six month period ending 31st March 2019 for the 2019 financial year signaling an improvement in profitability compared to the previous financial year.
The company is expected to record an increase of between 190% and 210% of the EPS following an increase in sales volume and net foreign exchange gain which resulted from the strengthening of the Kwacha against the dollar between end of September 2018 and end of March 2019.
“Board of Directors of Zamefa (the “Board”) advises the Shareholders that for the six-month period ended 31st March 2019, the basic earnings per share (“EPS’) and head line earnings per share (“HEPS”) are both expected to be between 190% to 210% higher than those of the corresponding period in the prior year for both the group and for the Company”, read a statement issued by the Zamefa Board on 2nd May 2019 in Lusaka.
Exchange rate volatility and receivable collections have been an impediment in the performance of the electrical cables manufacturer. With the former, in their 2018 annual report, according to the notes of the financial statements, the Group’s activities were exposed to a variety of financial risks, including credit risk, foreign currency exchange rates and interest rates risks. Their income statement showed a net foreign exchange loss of K80.2 million in 2018, compared to K9.38 million in 2017. Therefore, this clearly shows the impact of how exchange rate volatility may possibly impact the company when they report full year earnings for 2019.
On receivables impact on revenue increase, the company does express some concern over performance. “This increase is off a very low base and the company continue to operate at below normal levels of operating activity”, the company said. “This level of operating activity is primarily due to the ongoing slow settlement of export duty draw back claims and VAT refunds by the Zambia Revenue Authority and slow payments for product by ZESCO”.
For CEO Roseta Chabala, “these slow settlements continue to increase the borrowing requirements of the company beyond sustainable levels and the group continued to curtail its operations to remain within its available levels of credit.” This has an inevitable impact on the company’s working capital.
Going forward, the company expects its results for the six – month period ended 31st March 2019 to be released on SENS and published in the local press on or about 27 May 2019. Investors as always are encouraged to take precautionary measures when deal with securities. These include speaking to their designated stock advisor.