Zambeef Products PLC has released its 2023 Annual Report, highlighting the challenges faced in the past financial year due to economic headwinds in Zambia, including foreign debt restructuring, subdued copper mining activities, and the impact of climate change on crop yields and rainfall patterns. The country's GDP growth projection was revised downwards to 2.7%, leading to tightened monetary policy, inflation, reduced liquidity, and limited consumer expenditure. The depreciation of the Kwacha against major foreign currencies also increased costs for the company.
Despite the challenging operating environment, Zambeef's management team focused on revenue maximization, volume growth, and cost management, which resulted in commendable results. The company's vertically integrated business model proved to be robust and resilient in the ever-evolving market.
The company's strategy for the next five years includes strengthening its core business through targeted investments and expanding market share, implementing a tailored human capital strategy, enhancing strategic partnerships, and divesting non-core assets to allocate resources effectively. Zambeef's US$100 million expansion program, announced last year, aims to bolster various value chain capacities within the group and have a transformative impact on the Zambian economy.
During the year, Zambeef had the honor of hosting the President of Zambia, who inspected some of the company's strategic projects in Mpongwe, including cropping expansion, hatchery expansion, and a new wheat mill. This event also marked the official launch of the 2023 Wheat harvest season.
The economic environment in Zambia saw notable volatility in the local currency against the US Dollar, with fluctuations of up to 35%. Inflation concluded the financial year at 12%, attributed to the depreciation of the currency and escalating food and energy prices. Copper prices experienced a resurgence, driven by China's copper consumption, but subdued production levels impacted the economy's foreign exchange earnings potential.
Looking ahead, Zambeef foresees a positive trajectory for copper prices and is optimistic about the recently unveiled 2024 National budget, which signals an increase in government expenditure and is expected to boost consumer spending and drive economic growth. The company remains strategically positioned to seize opportunities and navigate the challenges of the ever-evolving economic landscape.
Additionally, on September 16, 2024, British International Investment Plc's (BII) conversion rights on their convertible redeemable preference shareholding in Zambeef will increase materially. BII is the company's largest ordinary shareholder and holds all preference shares. The company has the right to redeem all or part of the preference shares.