The fully integrated cold chain foods and retail company with operations in Zambia, Nigeria, and Ghana, Zambeef, has forecast satisfactory financial performance to be recorded in accordance with guidance estimates, according to a statement from the company.
“The Group announces that for the year ending 30 September 2020, dollar revenue, EBITDA and EBIT and adjusted Profit Before Tax are anticipated to be in line with market expectations”, read a statement issued by the sponsoring broker, Pangaea Securities on the 4th of May 2020 in Lusaka on behalf of Zambeef.
In a financial year that has seen the deterioration of the local currency against the dollar, accelerating food inflation, Zambeef remains optimistic about its prospects for the current financial year. “Despite the uncertainty caused by the Covid-19 pandemic, consumer demand for Zambeef’s products in-country has, to date, stood up well, and trading performance in H1 2020 has been satisfactory”.
However, the group remains cautious in its forecast as exchange losses may weigh heavily on their business like many others. “As such, and despite continued expected satisfactory operating performance during H2 2020, the Group’s Profit Before Tax for the full year is expected to be negatively impacted once these foreign exchange losses are factored in”. Furthermore, the currency depreciation will also have a cascading impact on the cost of inputs into the value chain. “This depreciation, in turn, impacts certain input costs into the business, as well as realising foreign exchange losses on our foreign currency-denominated debt”.
The uncertainty that COVID brings has shifted the management’s belief system to ensure that balance sheet protection is in place. “In response to the current uncertainty of the COVID-19 situation, the Group is moving quickly to take appropriate actions to further manage costs and preserve balance sheet flexibility during this period”. One notable action despite a subtle delay due to COVID-19 was the conclusion of the Sinazongwe deal. “The conclusion of the sale of Sinazongwe farm in April 2020 is a key milestone whose proceeds will go towards reducing debt”.
In terms of the balance sheet, “the Group’s net debt position as at 31 March 2020, excluding the proceeds, now stands at c.US$61 million”. Investors in the company will be able to see the full set of results at half-year 2020.