Metals Fabricators of Zambia PLC, known as ZAMEFA, has seen a remarkable 36% increase in revenue, reaching about K1 billion compared to the previous year’s ZMW 1,000 million with the current operating profit for the six-month period ended 31 March 2024, increasing to K83 million from K37 million in the previous year.
The Ultimate parent company for ZAMEFA is Reunert LIMITED, a company incorporated in South Africa. ZAMEFA was incorporated in 1968 and was privatized in 1996.
According to the Company financials seen by the Zambian Business Times and signed by the Company Secretary, the depreciation of the Zambian Kwacha has substantially contributed to the surge in revenue during the period under review.
The company’s substantial revenue growth has ignited a currency controversy due to the significant portion of revenue being generated in United States Dollars (USD), leading to a heated debate about the impact of Zambian Kwacha depreciation against the USD.
“Revenue increased by 36% to ZMW 1,396 million compared to the comparative period in the prior year (2023: ZMW 1,028 million). As most of the Company’s revenue was generated in United States Dollars (“USD”), the depreciation of the Zambian Kwacha against the USD contributed to higher revenue in the period under review.”
“Additionally, higher sales volumes also contributed to the increased revenue. The operating profit for the current period increased to ZMW 83 million (2023: ZMW 37 million) due to the improved gross profit margins resulting from a more favorable sales mix, the effect of the depreciation of the Zambian Kwacha against the USD, and higher volumes sold compared to the comparative period in the prior year.”
“The Company managed to reduce its net foreign liability position which mitigated the foreign exchange loss for the period to ZMW 24,1 million (2023: ZMW 52,9 million).
Finance costs of ZMW 20,1 million (2023: ZMW 14,6 million) were 38% higher than those of the comparative period in the prior year mainly due to the impact of the weakening of the Zambian Kwacha against the USD on the translation of the USD interest incurred on the company’s USD funding.”
Meanwhile, the Company’s cash position at the end of the first half of the current financial year ballooned to a net cash position of ZMW 167 million compared to ZMW 35 million in the prior period.
