In part 3 of our project to bring you insights into value
creation by some of the elite companies in Zambia, we had the opportunity to
interview the CEO of ZAMEFA in July 2016. Coincidentally, Rosetta Chabala was
celebrating a fantastic half year performance by the company. The exclusive of
the interview will published soon. For now let’s look at their numbers for 2016
thus far.
Revenue was up 7% as at June 2016 compared to the same time
last year. Domestic sales were stronger than exports by 30% which is indicative
of a thriving economy in Zambia (development drives demand). You will recall in
our earlier blog on ZAMEFA, value was being created mostly through exports.
Change in tide. Operating profit was also up by 102% compared to last year’s
score with net margin up to 9%. A sales mix and depreciation of the Kwacha was
partly attributed to that.
However, we also note that there was improvement in
their operations as return on non-current assets improved by 10%. Furthermore,
return on capital employed increased from 18% last year to 23% showing good
capital budgeting and a fantastic relationship with lenders at the company
increased its current liability debt to help with working capital.
Shareholders will have confidence in 2016 as equity rose by 61%.
In addition, eps is in positive territory compared to the negative from last
year. With return on equity currently at 41%, they half way to a bullish 2016. However,
they are cautious and aware of the gradual rise in competition and they hope to
use their reserve capacity to effectively compete on the market. According to the CEO, price wars when competitive gets tough is not an option. Extant players like ZAMEFA have memory that can allow them to adapt when competitive pressure increases.
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