In early October 2019, food processing conglomerate Zambeef Plc announced that its half year fears of a weaker 2019 performance had been overturned by the outperformance from its Cropping division such that the full year estimates for 2019 for adjusted Profit Before Tax (PBT) was likely to be 20% higher than analyst’s expectations.
“We are thus increasing our FY2019E adjusted PBT forecast from US$2.5 million to US$3.0 million”, read a statement issued by Raymond Greaves and Michael Clifton for Finncap.com (who are Zambeef’s designated brokers in the UK) issued on 2nd October 2019.
The updated statement came on the back of Zambeef having released a brief trading update for the year ending 30 September 2019. This statement must be pleasant and welcome surprise for the management team that is seeing the end of tenure for Chief Executive Francis Grogan who hands over the leadership at the close of the year. The management team also saw the arrival of Faith Mukuta as its new Chief Financial Officer who is pleased with the strong performance from the Cropping division where yields on soya beans, wheat, and maize have exceeded budgeted levels.
The good performance was not without its challenges. The company reported that “this is particularly noteworthy in a year where Zambia is suffering from a severe drought and highlights the quality of water resources available to Zambeef, particularly at Mpongwe farm”. The analysts believe that the good result in Cropping “adds an incremental US$500k to the income statement such that we increase our FY2019E adjusted PBT from US$2.5m to US$3.0m (+20%)”.
The company has also been forced to shed off no core assets with the recent disposal of Sinazongwe Farm for USD10 million. Should all the conditions precedents be meet in time, the Zambeef Balance Sheet and Income statement will show positive performance at end of year reporting.