Padenga warns of sharper losses for the second year running

Author Name
Respect Gwenzi
Author
Markets 3 weeks ago
  • Padenga’s profit warnings highlights devastating COVID-19 effects
  • Meat exports came off to nil as European restaurents closed during lockdown
  • Company optimistic of rebound on the outlook

Zimbabwe’s biggest producer and exporter of crocodile skin Padenga, has issued a underwhelming profit warning statement ahead of the company’s year-end (2020) financials release.

In a statement the company said the group’s crocodile and alligator business have been impacted by market dynamics resultant from the COVID-19 pandemic and in particular a softening of international markets for luxury exotic skin products.

The company said this has been one of the most depressed environment ever, in its history. Padenga started operations in 1965 as a small, family run farming operation known, then known as Kariba Crocodile Farm. It is formerly a division of Innscor Africa and was listed in November 2010.

Among the challenges faced in the just ended financial year, Padenga said there were limited sales opportunities for skins not meeting exacting quality standards and when found, sold at very depressed prices particularly for alligator skins from the US.

Padenga runs a US based alligator skin business in Texas, USA which it purchased in 2012. At the time of purchase, the business produced approximately 3,000 alligators per year but current capacity has been increased to 60,000 animals per annum.

Padenga also produces crocodile meat from its export approved abattoir for sale to European and Asian markets, a business it said failed to pick up any sales in the period under review, due to closure of restaurents across Europe during the lockdown period.

Despite these challenges, the company said it was able to sustain skins supply contracts with premium customers at a time when most crocodilian operations worldwide had not market and ceased operations.

“The net impact of these factors is that the forthcoming results for the financial year ended 31 December 2020, will reflect a significant reduction in profits relative to last year” the company quipped.

In 2019 the company a revenue and profit position of US$29.1 million, which was significantly reduced from the 2018 levels of US$37 million. Operating profit and Profit before tax for the respective year came off 38% and 22%, respectively, from the prior year.

A profit warning for the year under review would mean that the company would have suffered double digit declines in revenue and profit over 2 successive years. However the company’s share price continues to defy fundamentals and has mounted 852% and 20% in nominal terms in 2020 and 2021 respectively.


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