It is mid-summer and temperatures are sweltering in Zambia. Perfect weather for a BBQ no doubt. A dash to a Zambeef macro outlet is definitely a must as the company recently announced that the Group year, which ends 30 September 2018, would post an adjusted Profit Before Tax (PBT) of around circa US$ 5 million, which exceeds market expectations by more than 10%.
According to their statement to shareholders, “this strong performance has been driven largely by the Retail and Cold Chain Food Products division, which has delivered strong volume and margin growth during the year as a result, inter alia, of the continued successful rollout of the Macro Stores and the resulting increase in demand for Cold Chain Food Products and stock feed. The Stock Feed division was able to deliver strong volume growth due to the better than expected performance of the Mpongwe stock feed plant”.
Sadly though, “this improved performance is despite the approximate 12% lower than expected wheat yields the Group experienced at the end of the year, as a result of Bacteria Leaf Streak (BLS), as announced in their Trading Update of 29 August 2018”. At the moment, the Group does not expect BLS to have a material negative effect on its consolidated results for the coming financial year which should be comforting for investors.
Debt is expected to be in the region of US $59m. This is something that investors in the company such as CDC will be keen to dismantle hence the strategy of offloading non-core assets (Zampalm being the first when CDC came on board).
With efforts certainly being made by the company to reduce on its debt exposure, it comes as no surprise that the Evening Standard would publish an article on how attractive Zambeef is now looking to investors. According to a recently published article, investors are looking for a rounded small-cap portfolio and the options at the moment are not many. With Produce Investments being snapped up by investors and Crawshaw going bust barely a week ago, Zambeef is looking more promising.
The audited financials are expected sometime in November 2018. With that will come the annual general meeting which will be the first without former co CEO Dr Carl Erwin who left the group earlier this year. Dr Jacob Mwanza will certainly be smiling as his group of companies deliver positive performance amidst one of the most challenging macroeconomic periods of this decade. Furthermore, investors will be keeping close watch on signals of a dividend announcement. Based on the Chairman’s statement in the 2016 annual report, a review of the dividend policy is eminent.
