Unifreight banks on tobacco transport despite slow start

Listed logistics firm Unifreight Africa Limited is upbeat on improved performance in the 2024 financial year and going forward supported by the tobacco industry despite starting the year on a slow note.

Chairman Peter Annesley revealed the group secured contracts that enable them to transport 20 percent of the country’s tobacco, a development that is expected to enhance earnings performance.

“Our growth is underpinned by quality contracts we have been able to execute following the completion of the fleet expansion project in 2023. We have successfully secured a larger share of the tobacco market and now transport over 20 percent of the total Zimbabwean tobacco crop,” said Annesley.

This is despite the slow start to the year 2024. According to Unifreight, the first quarter saw depressed volume performance due to currency volatility and exchange rate fluctuations which eventually led to the introduction of the structured currency, the gold backed ZiG introduced on April 05.

“The fiscal year 2023 was marked by a challenging economic environment, primarily due to the substantial depreciation of the Zimbabwean dollar.

“This eventually led to the introduction of a new currency, the Zimbabwe Gold (ZIG). The significant currency depreciation experienced during the year continued to constrict market liquidity as industries grappled with reduced access to finance in either Zimbabwean Dollars or Nostro.

“This fiscal tightening adversely affected many sectors, including Unifreight, by impacting cash flows,” said Annesley.

During the year to December 31, 2023, the group posted a profit of $192 billion. This was largely attributed to improvements in operating margins, which rose from nothing in 2021 to 2,56 percent in 2022, and further to 20,6 percent in 2023.

Annesley said the significant improvement in 2023 was driven by the management team’s aggressive pursuit of cost containment strategies, coupled with the deployment of an additional 50 FAW 380FT Truck Tractors with Afrit Tautliner Trailers into the local and cross-border market.

“During the year, we successfully renegotiated terms on foreign-denominated loans with major financiers to more favorable local conditions.

“As of 31 December 2023, our loan book stood at $24 billion. Additionally, we transitioned our property plant and equipment policy from a cost model to a revaluation model, resulting in a deferred tax liability of $52 billion in 2023, up from $2 billion in 2022,” he said.-ebusinessweekly