Zambeef Products slips after cutting full-year profit guidance

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Sharecast News | 29 Mar, 2019

Zambeef Products' shares slid on Friday after it lowered its guidance, stating that it expects full-year adjusted profit before tax to be 30% to 40% below market expectations and that it is likely to report an interim trading loss.

The West Africa focused agribusiness is working on improving margins and, assuming it is successful in achieving this, expects a profitable second half of the year as a result, with the business having struggled as the Zambian economy faces "significant fiscal pressures".

When combined with the shocks from the global economy and continued depreciation of the local currency, these pressures have resulted in higher food and fuel prices, directly affecting core customers' disposable income.

Meanwhile, the Retailing and Cold Chain Food Products Division continues to grow revenue but volumes are expected to be similar to the prior period, while margins have come under pressure due to difficult market conditions.

A statement from Zambeef said: "The depreciation of the Kwacha has driven up input costs which we were unable to fully pass on to the consumer in the first 6 months. Management have noted that Zambeef has started to see margin improvements towards the end of Q2, and expects margins to gradually improve in the second half of the year."

Meanwhile the Cropping division is expected to suffer despite expectations of a satisfactory soya crop harvest as due to higher than expected forecasted harvest nationwide putting pressure on already low prices, while the Stock Feed division scored "good" revenue growth but lower margins.

Zambeef Products' shares were down 11.87% at 9.16p at 1321.

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