Zambeef Plc has posted massive losses after tax of K31.8 million, triggered by the depreciating Kwacha, which slashed Zambian consumers’ purchasing power and pushed up input costs.

And Zambeef has projected that Zambia’s macroeconomic conditions will remain challenging in the second half of this year, with continued downward pressure on disposable incomes.

According to a consolidated statement of comprehensive income for its financial results for the six-month period ending March 31, 2019, Zambeef incurred huge losses of K31.8 million after tax from posting impressive profits of around K23 million during the corresponding period last year.

“During the first six months of the financial year, Zambeef faced very challenging macroeconomic conditions, which resulted in less disposable income for our customers. The weakening Kwacha also led to input costs for the Group, which could not be passed onto the consumer. This led to shrinking margins during the period as customers migrated to cheaper, lower margin products,” Zambeef stated in a presentation announcing its results.

“…This resulted in the Group posting a loss after tax of ZMW31.8 million in this first half compared to a profit after tax of ZMW23 million before discontinued operations for H1 2018.”

And Zambeef projected that Zambia’s macroeconomic conditions will remain challenging in the second half of this year, with continued downward pressure on disposable incomes.

“We anticipate macroeconomic conditions to remain challenging in the second half with continued downward pressure on disposable incomes. The continued volatility of the kwacha and negative market sentiment is likely to continue to keep margins under pressure,” it stated.

“These difficult times place a renewed emphasis on management to continue working strategically, driving efficiencies throughout the Group, think long-term and develop innovative solutions that address current market conditions.”

Commenting on the financial results, Zambeef board chairperson Dr Jacob Mwanza acknowledged Zambia’s deteriorating economic conditions as having badly hit consumers’ disposable incomes across the country.

“Significant fiscal pressures on the Zambian economy during the period have presented challenges for the market and impacted the disposable income of Zambeef’s customers. Exchange rate movements have not favoured the Group in the period and the depreciation of the currency (Kwacha) has led to the Group reporting realised exchange losses,” Dr Mwanza, a former Bank of Zambia governor, explained.

He, however, announced that Zambeef was hopeful of an improved financial performance in the second half of this year.

“Despite the tough trading conditions, the management team have continued to deliver on the Group’s key strategic initiatives throughout the period and the second half of the year is expected to see an improvement in both revenue and margin performance,” stated Dr Mwanza.

“The Group’s strategic focus on the continued roll out of new Macro outlets across Zambia contributed to revenue growth in the period and its retail footprint increased to 216 retail outlets.”