TZI, which came under fire from the market for issuing two conflicting trading updates late last year is expected to make a come-back with the release of the company’s six months to March results
The company is expecting a boost from the exchange rate applied to conversion of Zambian horticultural operations earnings to Zimbabwe dollars for reporting purposes.
The market quizzed management for issuing a positive profit update that appeared to have been retracted six weeks later forcing chief executive officer Hillary Duckworth to go all the way to explain to analysts the breakdown of the group’s earnings per share base at a briefing on the final results to September 2002.
Analysts said the company’s share price was over-punished by negative sentiment arising from the confusion that surrounded the trading updates.
The company is set to harvest a windfall on foreign exchange gains as a result of the new exchange rate of US$1:$824 and the strengthening of the Euro against the United States dollar is poised to increase earnings and strengthen margins as freight costs are in US dollars while revenue is in Euro.
Concentrating on core business with divestment of Art and the Strategies unbundling awaiting regulatory approval, the company has the potential to focus on the lucrative Agriflora export business.
Chairman Albert Nhau said TZI would follow the same route as Art with Strategies Holdings, which already has an independent board and management but the decision on how to proceed with Strategies depended on the regulatory approvals.
Analysts have forecast half-year forward earnings per share of 3772,42 cents per share from the current EPS of 1371,79 cents per share.
The company has targeted a share price of $147 from $58 at which the share traded on Wednesday.
TZI would continue to focus on the agri-export business and would look for opportunities in Malawi, Zambia, Mozambique and Zimbabwe.
The group reported a 169% rise in attributable profit to $4,175 billion on turnover that rose 119% to $22,6 billion in the year to September 30 2002.
Analysts said TZI’s associate companies – largely Art – which helped with a $720 million contribution to bottom line of $4,175 billion last year was likely to contribute significantly to the group’s bottom line owing to contributions from new stationary distribution companies which were established in Zambia during the year and in Malawi shortly after the September year end. A third company opened in South Africa in December 2002.
The company said the group’s strategy on exports would assume an even greater importance this year but it would continue to maintain a manufacturing base in Zimbabwe and expand the distribution outlets in the region.