In its half year to June 30, 2022, ZIMRE Holdings said it experienced a mixed business environment in the jurisdictions it operates in.
“The 2022 operating environment has taken a downturn, shifting the anticipated growth prospects forecast at the beginning of the year. The global economy has similarly slowed down as a result of the Russia – Ukraine War and the compounding effects of the COVID-19 pandemic,” Matete said.
Locally, the Ministry of Finance and Economic Development revised Gross Domestic Product (GDP) growth projection downwards from 5,5% to 4,6%, a reflection of the global operating environment.
The local currency in the period under review depreciated by 70% in the first half of the year which amongst other factors saw the country slipping into double digit month on month inflation and triple digit year on year inflation.
The regional countries in which the ZIMRE operates in experienced rising inflationary pressures amidst efforts to reverse the effects of the COVID-19 pandemic. Zambia’s economic growth in 2022 is expected to slow down to 3,1% compared to 3,6% in 2021 mainly due to the expected reduced output from the agricultural sector.
Matete added that, the Mozambican economy is set to benefit from the resumption of natural gas projects as well as efforts to harness the agricultural potential of the country.
Mozambican economy is expected to grow at an average rate of 5,7% between 2022 and 2024.
According to Matete, Malawi’s agricultural output was adversely affected by severe weather conditions and this is expected to slow down economic growth of the agriculture dependent country. Botswana’s economic output has gone back up to pre-pandemic levels on the back of strong global demand for diamonds despite rising inflation levels.
However, the group was satisfied with its profitability levels and decided to share a portion with its shareholders.
Board chairman Desmond Matete in a statement accompanying results said, “The Board having considered the group’s level of profitability and reserves, economic downturn as a result of the Russia – Ukraine war and associated risks to business growth will be declaring its first USD denominated dividend of US$250 000.”
The group said the dividend was in line with the its policy to pass positive cashflows from investments to the ultimate shareholder.
The group recorded a profit after tax of $9,0 billion compared to a loss after tax of $1.6 billion in the prior period. This was mainly attributable to fair value gains on financial assets and investment properties. The profit growth was above the inflation rate at 191%.
ZIMRE saw its total income for the period at $28,4 billion grew by 355% compared to prior period, and it was underpinned by positive investment returns propelled by fair value gains on investment properties.
Inflation adjusted gross premium written for the period under review was $6,4 billion, down 8% from $6,9 billion in the prior period, this was due to the inflationary pressures locally that weighted down the real business growth in the region.
Matete said, “Domestic operations contributed 71% of the gross premium, with the balance coming from the regional operations. Inflation adjusted total claims and expenses for the period increased from $6,9 billion to $15,0 billion as a result of a high claims experience which saw net benefits and claims growing by 20%.” – Harare