31st Mar 2014 07:37
LONDON (Alliance News) - Zambeef Products PLC saw its shares fall sharply Monday after it warned that it will report a pretax loss for the first half of the financial year due to increased competition in its markets that is pushing down prices as well as the impact of disease control measures in the Zambian pig market.
In a statement, the agribusiness that operates in Zambia, Nigeria and Ghana said it expects revenues for the six months to March 31 to be in line with market forecasts, and its cost reduction programme to meet its own hopes.
However, it has been hit by a range of issues, it said.
Increased volatility in the Zambian kwacha will have a substantial impact on the company, raising its dollar-denominated costs for things like edible oils and stock feed. It is also facing increased competition, particularly in the retail sector, which means it can't pass higher costs on to customers, meaning a hit to margins. It said the competition was particularly intense in edible oils.
The company is also being hit by an outbreak of African swine fever in Zambia, even though its own animals have not been affected. The company said that government-imposed restrictions on the movement of pigs and the sale of pork products, which lasted for approximately three months until mid-February, have significantly impacted performance at its Master Pork business.
"The group anticipates a return to normal trading and profitability in the second half of the year for the Pork Products division, although these factors have resulted in the business being well behind management expectations in the first half of the year," it said in a statement.
Zambeef Products shares were down 13.8% at 26.39 pence early Monday, one of the biggest declines on AIM.
By Steve McGrath; [email protected]; @SteveMcGrath1
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