Thursday, May 15, 2008

Rising fuel prices call for strict controls, says Sekele

Rising fuel prices call for strict controls, says Sekele
By Joan Chirwa
Thursday May 15, 2008 [04:00]

RISING fuel prices and agricultural commodities call for strict controls in business, Zambian Breweries Plc Company secretary Ezekiel Sekele has stated. And Zambian Breweries has stated that it failed to fully exploit market opportunities last year owing to a regional shortage of glass bottles.

In a statement to announce the company’s performance during the financial year ended March 31, 2008, Sekele stated that large proportions of the group’s costs were driven by agricultural commodity and fuel prices.

“This will simply re-emphasise the need for strict cost controls to be in place at all times,” Sekele stated. “The Zambian economy is however expected to continue enjoying the benefits of low inflation, low interest rates, a strong currency and robust GDP growth, and there is every reason to believe that these will translate into continued growth in demand for the group’s products.”

And Sekele stated that the group experienced strong underlying demand for most of its products during the just-ended financial year, but failed to exploit the market resulting from a regional shortage of glass bottles.

“A region-wide shortage of glass bottles prevented the group from fully exploiting these market opportunities. Nevertheless, volumes of both beer and sparkling beverages did grow over prior year by 2.8 per cent and 2.1 per cent respectively,” Sekele stated.

The group’s profit after tax was 36 per cent higher at K60.1 billion during the financial year under review compared to K44.2 billion in the corresponding period.
Net turnover increased by 20.5 per cent to K450.5 billion from K373.9 billion during the 2007 financial year.

“Prices of beer products had to be increased in February 2007 in response to an unexpected increase in the rate of excise to 75 per cent. Thus the increase in net turnover of more than 20 per cent is the combined result of both volume growth and prices increases,” Sekele stated.

“The fact that profit after tax was able to grow faster than net turnover, is partly due to the strong Kwacha lowering the cost of imported items, and partly due to the strong emphasis that the Group puts on cost control.”

Meanwhile, National Breweries saw a reduction in its net profit during the financial year ended March 2008, recording a 15.2 per cent loss compared to the previous year.

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