Zambeef (AIM: ZAM), the fully integrated cold chain foods and retail business with operations in Zambia, Nigeria and Ghana provides the following update on trading.
During the half year period to 31 March 2023, the Group has seen demand for its products increase, supported by a price moderation approach, resulting in volume growth across most product categories. However, lower than expected selling prices and higher input costs (which couldn’t be passed on to the consumer), including higher genset diesel costs in the first quarter of 2023, put pressure on gross margins. The cropping division was adversely impacted by a 71% drop in the price of soya beans, exacerbated by reduced yields, which was partially offset by the higher maize price The higher maize price further exerted pressure on stockfeed margins. The operating environment was characterised by increased competition, no real growth in consumer spending and unstable macroeconomic fundamental effects, largely driven by delayed finalisation of the country’s debt restructuring.
For the year ended 30 September 2023 (all in USD), revenue, adjusted EBITDA and reported profit before tax are expected to be inline with market expectations. However, gross profit is expected to be between 8% – 12% behind market expectations, largely due to the pressure on margins arising from lower than expected pricing and higher input costs as described above.
The exchange rate depreciated steadily over the period, experiencing a sharper depreciation towards the end of March 2023, beginning the financial year at K15.9/USD and ending the period at K21.6/USD.
The Group expects its results for the half year period ended 31 March 2023 to be released by the end of June 2023. Shareholders are advised that the information contained in this Trading Update has not been reviewed nor reported on by the Company’s external auditors.