Zambeef: Expansion Of Core Cold Chain Businesses
Edison | Jun 24, 2015 02:36AM ET
Growth in cold chain business drives turnaround
During H115, Zambeef Products (LONDON:ZAMB) has made significant progress in improving the profitability of its core cold chain food distribution businesses. Gross profits from the beef, chicken, pork, milk, eggs and fish operations rose by 29% year on year to $21.3m (48% in kwacha terms), resulting in the group generating $0.1m profit before tax (adjusted for unrealised forex) compared with a $3.2m loss in H114. Following the disposal of the non-core Zamanita business which completed earlier this month, we reinstate our estimates and see fair value at 17-30p.
Expansion of core cold chain businesses
Group revenues rose by 7% year-on-year to ZMW844.1m. This was driven by volume growth in pork, chicken and milk products, a recovery in pricing in the Beef division and a greater acreage under cultivation in the Cropping division. In dollar terms, group revenues reduced by 7% year-on-year to $130.7m because of the 21.5% devaluation of the kwacha. Total divisional profit margin (gross profit margin) rose by 5.6pp to 38.3% reflecting margin improvements in the Cropping, Beef and Pork divisions. Excluding unrealised foreign exchange losses of $3.9m, but including realised foreign exchange losses of $3.7m, the pre-tax result shifted from a $3.2m loss to a $0.1m profit. Further growth is expected as the new chicken hatchery and associated stock feed plant come on line in September and additional investment is made in increasing milk production capacity. A substantially larger processing and distribution hub is planned in the Copperbelt, with capacity to support distribution into the DRC as the group transitions into a major food provider for the SADC/COMESA region.
Unlocking value of assets
The performance of the Edible Oils division was adversely affected by movements in the kwacha/US dollar exchange rate as its input costs are largely US dollar denominated. Divisional gross profit fell by 26% year-on-year to $4.6m in H115. The sale of the Zamanita business to Cargill for $26.4m plus assumption of $11.1m debt, reduces exposure to currency and commodity price fluctuations. It also enables management to reduce debt, some of which is dollar denominated.
To Read the Entire Report Please Click on the pdf File Below
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.