Violent kwacha destroys Zambeef results

Africa’s volatile currency market left a sour taste in Zambeef’s annual results on Wednesday, despite strong consumer hunger for African meat.

The AIM-listed agri-business with operations in Zambia, Nigeria and Ghana saw operating profits increase by 140% in USD to $9.55m (£6.12m), and by 189% in Zambian kwacha to ZMW162.08m (£9.31m) in the year to 30 September.

Profit before tax - excluding exchange losses - was up by 576% in USD and 712% in ZMW.

However, Zambeef said the results were severely impacted by the rapid depreciation of the kwacha during the year, resulting in exchange losses of $20.2m or ZMW142m.

Those exchange losses turned a pre-tax profit of $15.1m into a pre-tax loss of $5m.

“Despite significant macro-economic challenges, the Group's performance was commendable, particularly in our core cold chain food products business, and we look forward to growing this business further, both in Zambia and the wider SADC/COMESA region, and developing the business into a regional food supplier”, said chairman Dr Jacob Mwanza.

“The successful sale of Zamanita resulted in net debt, in US Dollar terms, reducing by 39 per cent, and we continue to actively explore strategic opportunities in relation to our non-core businesses and assets, which will allow us to unlock value and capital gains from within the group, and thereby reduce debt further.”

Zambeef was working to shore up its exposure to the volatile African currency market, by converting a “significant amount” of its USD denominated debt into ZMW, it reported.

As of 12:20 on Wednesday, shares in Zambeef were down 1.92% to 6.37p.