Beverage, Zambian Breweries

Ahead of of the year ended 31 December 2020 trading results to be announced on 9th March 2021, Zambrew in its trading statement, issued on the 3rd March, 2021, announced to its shareholders how much less their dividends will be compared to the corresponding period last year.

Citing losses as a result, in part, of the impact of Covid 19  and the depreciation of the domestic currency, The Board of Directors of Zambian Breweries Plc stated that shareholders’ dividend for the year ended 31 December, 2021, will be 98% less than the one received in the prior financial year. “This reduction is partially due to the impact of the COVID-19 pandemic, since the closure of bars under Government’s mitigation measures affected sales, and the consequent loss of returnable glass bottles in the trade as a result of home consumption affected production capacity. Capacity upgrades were also postponed during the lockdown period, and the importation of various inputs and finished products were constrained” read the statement.

This was actually expected; if there is any company that was severely impacted by the effects of Covid-19 is zambia breweries. The measures put in place by the Government of Zambia to curb the spread of the virus, included the closure of bars and nightclubs for most part of 2020. The measure to close these bars and nightclubs, cut the lower part of the supply chain of the brewing industry; the producer, who in this case is Zambrew, could not sell its product to owners of bars and nightclubs, who are its customers, due to the fact that they were out of operation.

When bars and nightclubs were allowed to operate on a take-away basis, Zambia breweries cites capacity losses that came in form of unreturned returnable glass bottles.

Due to the company’s debt, Zambrew also made losses when the Kwacha continued depreciating; this was due to the fact that most of its debt was in foreign currency as a result the company started making exchange losses everytime the domestic currency depreciated.

The trading note ends by stating, “shareholders are advised to exercise caution when dealing in the Company’s securities until publication of the results”.

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