As the 2016 Zambian presidential election results strolled
in, many of our readers were busy tucking into Zambeef’s products. The quality of
their products resonates with their 2016 half year performance. What stood out
from the interim report is how well the vertically integrated company performed
operationally. They continue to focus on their core business albeit now seek to
dominate every aspect of the food value chain with their aggressive opening of
micro outlets to get more of their product to the masses (Zambeef in your face).
No doubt a lot of their current success can also be attributed to stable kwacha
during the period under review (reduction in exchange losses).
Stock feed was their biggest value creator with sales of $9.2m
representing a 133.4% increase from the previous year. Operating profit
increased by 72% with earnings celebrating a 366% bounce back from negative
territory in 2015. EBITDA was up 32.7%
confirming management’s intention to pursue a cost control strategy (volatile
EBITDA signals out of control costs). Furthermore, there was a 21% downward
movement in their gearing signaling a move away from long term debt.
Interesting is 24% reduction in non-current assets which inadvertently improved
the company’s return on fixed assets.
The company envisions a stronger operating performance in
the second half of 2016. Critical to this will be a stable currency and controlled
inflation. Post-election sentiments indicate that the will be stability in the
financial sector making it prime season for Zambeef to continue to create value
as they focus on being a regional food supplier. However, keeping an eye on the
IMF program on agriculture will be important. Internationally, Zambeef is set
to make more strides as its partner Shoprite opens up more stores in West Africa
further expanding their footprint. All things considered and remaining constant, year-end will be very rewarding for shareholders.
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