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ZCCM-IH’s profits drop by 47%By Stuart Lisulo on 15 Jan 2020
ZCCM-IH posted reduced profits after tax of K448 million during its financial year ending March 31, 2019, triggered by reduced dividends paid by Kansanshi Mining Plc, and lower income from Konkola Copper Mines (KCM) Plc, among others.
But ZCCM-IH chief executive officer Mabvuto Chipata says the copper pricing outlook this year is positive in view of the red metal’s current rebounding on the back of the easing US-China trade war tensions.
Meanwhile, Chipata says ZCCM-IH is patiently awaiting the outcome of Zesco and Copperbelt Energy Corporation Plc’s (CEC) continued negotiations over the Bulk Supply Agreement (BSA) scheduled to lapse on March 31, this year.
Speaking during a press briefing in Lusaka, Tuesday, ZCCM-IH chief financial officer Chilandu Sakala revealed that ZCCM-IH’s profit after tax at group level during its financial year ending March 31, 2019, dropped to K448 million, compared to K843 million in the previous corresponding period in 2018, mainly induced by reduced dividends paid by Kansanshi, lower income from KCM and increased losses incurred at subsidiaries Investrust Bank Plc and Ndola Lime Cement Company.
The reduced profit for the year translates to around 47 per cent less than what ZCCM-IH earned in the previous corresponding period, and was also affected by losses sustained at company-level.
“The Group‘s profit for the year was ZMW448 Mn (2018: ZMW843Mn). Overall profit for 2019 declined by 47 per cent compared to 2018, mainly due to loss-making subsidiaries: Investrust Bank and Ndola Lime. The reported Company loss for the year was mainly due to: 33 per cent reduction in revenue was mainly due to a decrease in dividends from Kansanshi Mining Plc from K149 Mn in 2018 to K45 Mn in 2019; 93 per cent reduction in other income by K360 Mn (Konkola Copper Mining Price Participation income); impairment loss increase from K114 Mn in 2018 to K373 Mn in 2019,” Sakala told journalists at the Southern Sun Hotel.
And when asked for the ZCCM-IH’s copper pricing forecast for this year in view of the easing US-China trade war, Chipata expressed optimism that copper prices would rebound.
Prices of the red metal have remained firm at around US $6,200 per tonne, according to the London Metal Exchange (LME).
“The copper forecast…you have noticed the long-term forecast of copper is bullish, it’s positive, and the reason is really that where we are going into the future, the electric vehicle is going to be a key driver of copper; the amount of copper that will be required to be used in the new vehicles is quite significant,” Chipata replied.
“We hope that, in fact, the current position continues to improve. I think in the immediate past, the China-US trade war situation affected prices, but in the long-term, despite short-term downward movements in the copper price, the long-term forecast is that copper prices are going to improve.”
Meanwhile, Chipata announced that ZCCM-IH was patiently awaiting the outcome of Zesco and CEC continued negotiations over the Bulk Supply Agreement (BSA) scheduled to lapse on March 31, this year.
“Yes, this is a matter, I think which has been active recently. But I am also aware there are detailed engagements that are going on and we can only await the result of those engagements,” said Chipata.
ZCCM-IH’s dividend declared to shareholders last year equally decreased to K53 million compared to K98 million in the corresponding period in 2018.
About Stuart Lisulo
Stuart Lisulo is an experienced journalist with a focus on business news.
Email: stuart [at] diggers [dot] news
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