Zambeef Products Plc can look back proudly on its performance during
the 2003/4 financial year. This has been a difficult year in which
Zambeef has been faced by a number of unexpected obstacles.
During the year under review, the VAT regulations were changed,
changing most agricultural output including meat and milk from zero
rated to exempt. This resulted in Zambeef being unable to reclaim
its input VAT with a direct cost to the company of approximately
K400 million per month.
In addition, the outbreak of Foot and Mouth disease in Southern and
Central province resulted in Zambeef not having access to the
traditional herds in these provinces for part of the financial year.
The strong South African Rand resulted in a significant increase in
the costs of consumables, machinery maintenance, and motor vehicle
maintenance, while diesel prices also increased significantly.
Despite these setbacks, Zambeef has performed well fully justifying
the large diversification policy the company has undertaken over the
last six years.
Although the beef division has had a difficult year the other
divisions have shown significant growth in both turnover and
profitability.
As a result Zambeef is a well-diversified business which can look
forward with a great deal of confidence to the future. The
performance of each division is dealt with in more detail below.
Beef Division
This division has had a difficult year as already mentioned. The
availability of traditional cattle has been severely restricted
resulting in Zambeef having to reduce its meat processing
operations. This shortage of traditional cattle resulted in prices
for commercial cattle reaching record levels. These high prices for
beef have been difficult to pass on to the consumers resulting in
margins being reduced during the year.
In order to increase the access to the traditional herds Zambeef has
invested significantly in regional abattoirs with abattoirs in
Shang'ombo, Chipata and Senanga opened during the year. An abattoir
in Namwala is also nearing completion. Another abattoir in
Sinazongwe has been planned for. Zambeef hopes that these regional
abattoirs will help this division during the next financial year.
Feedlot Division
This division has had an outstanding year as a result of the
significant beef price increases during the year. Both volumes and
the profits of this division have increased significantly.
Zambeef has continued to improve the efficiency of this division
through increased mechanization and investment in improved rations
and feeding techniques. The average daily weight gains have
increased significantly during the year and the company looks
forward to continued growth in this division.
Chicken Broiler Division (Zamchick)
This division continues to be one of Zambeef’s fastest growing
divisions and one of the divisions in which Zamchick has firmly
established itself as the leading brand of chickens in Zambia.
Production has increased dramatically during the year to 60,000
birds per week. With the shortage of beef and increase in beef
prices during the year the demand for chickens increased
significantly and Zambeef’s large investment has allowed it to pick
up the major share of this increased demand. Zambeef’s increased
production has been matched by parallel investment in the related
feed plant, chicken abattoir and chicken processing facilities.
Zambeef believes its broiler operation is a highly efficient
operation which can compete very favourably in the region.
The chicken abattoir is now fully automated with a capacity of
15,000 birds per day.
The large investment in upgrading the feedplant and in ration
formulation has resulted in Zambeef obtaining world class feed
conversion ratios. This remains one of Zambeef’s most exciting
divisions and is expected to continue its strong growth both within Zambia and in the region.
Chicken Layer Operations
(Zamchick Egg)
This division has had an outstanding year, having doubled in size
over the year to 60,000 layers. Despite problems with smuggled eggs
from Zimbabwe during the year, the division has performed superbly
and Zamchick Egg has firmly established itself as Zambia's first
national egg supplier. This division has also benefited
significantly from Zambeef's significant investment in its feed
plant operations. This division too can look to the future with a
great deal of confidence.
Dairy Operations (Zam milk)
Zam milk has enjoyed a very successful year having increased milk
production by approximated 25% during the year.
This has been achieved through continued increase in the dairy herd
which currently stands at 900 milking cows at any time together with
an increase in the average yield per cow.
The Zam milk dairy herd is now one of the largest single herds in
sub Saharan Africa and the efficiency levels now achieved allow this
division to compete favourably in the region.
Zambeef is currently undertaking an expansion of its milk processing
plant in order to enable the company to produce more added value
products. This remains one of Zambeef’s most profitable divisions
and the company looks forward to sustained growth in this division.
Zamchick Inns
During this financial year Zambeef formed a fast food chain under
the brand name Zamchick Inn. This is a fast food chain specialising
in providing excellent value for money chicken and chips to the
public.
The first four Zamchick Inns have now been opened with a further
three currently in the process of being set up. The reception the
Zamchick Inns have received has been tremendous and as a result this
division is expected to grow significantly during the next year.
This division complements the broiler division very well and Zambeef
looks forward to having Zambia’s first national fast food network.
Zamleather
Zambeef has a wholly owned subsidiary called Zamleather Limited
which owns and operates a tannery in Lusaka. The tannery sells
leather on the international market in the semi-processed form
called wet blues.
These are mainly sold to China, Hong Kong and Italy. In addition,
finished leather is sold both within Zambia and the region.
The tannery has continued to invest in upgrading and improving its
facilities which has resulted in Zamleather developing an excellent
reputation both locally and internationally. Exports in the last
year were approximately US$1.4 million. This has been a satisfactory
performance despite the weak international prices for leather over
the last year.
Zamshu
In order to reduce its reliance on the weak international leather
prices, Zamleather Ltd commissioned during the year its own shoe
plant specializing in the production of industrial and safety
footwear under the trade name Zamshu.
Zamshu has during the year established a reputation for quality and
has in addition to local sales secured regular exports within the
region. Zamshu is part of Zambeef’s continued effort to further add
value to all of its products in order to increase margins.
Retailing Division
The retailing division has continued to expand and be the engine
room which drives the marketing of Zambeef products and its
expansion. During the year Zambeef has concentrated on expanding its
retailing network into outlying towns which has been extremely well
received in these areas.
Very successful outlets have been opened during the year in Chipata,
Kabwe, Solwezi, Chirundu and Kasama. Further outlying outlets are
planned for next year.
Zambeef will continue to upgrade and improve its retailing network
during the next year. The continued significant growth in turnover
is evidence of the successful expansion of the Retailing division.
Farming Division
This division has continued its rapid expansion during the year with
700 hectares of irrigated crops and 1,500 hectares of dry land crops
planted during the year making Zambeef one of the largest Cropping
Operations in Zambia.
The division has had an excellent year benefitting from the good
crop prices during the year and being one of the most profitable
divisions within Zambeef. The farming division complements Zambeef’s
feed plant operation and dairy, feedlotting and poultry operations
by controlling the inputs costs for these operations.
The tremendous success of Zambeef’s cropping division resulted in
the company acquiring, on 15th October 2004, the assets of Gwembe
Valley Development Company Ltd (in receivership). This new
acquisition will enable Zambeef to develop a further 2,000 hectares
of irrigated crops over the next two years. As a result significant
growth will continue in this division.
