ZCCM-IH Profits Soar To K438.9 Million
ZCCM-IH recorded huge after-tax profits of K438.9million in its fiscal six-month period ending June 30, 2020, triggered by increased income from foreign exchange gains from foreign currency denominated assets. group.
And ZCCM-IH says copper prices are expected to rise steadily on the back of a solid recovery in Chinese demand for the red metal.
According to an unaudited statement for the financial half-year ending June 30, 2020, ZCCM-IH Group reported an increase in profit of almost K 439 million, compared to K 128.4 million as of September 30, 2019, mainly driven by higher income from foreign exchange gains.
“The Group reported a profit for the period of ZMW 438.9 million (September 2019: ZMW 128 million), mainly due to the increase in net financial result of ZMW 138.7 million recorded in September 2019 to ZMW 327.3 million recorded in June 2020. The increase in financial income is due to foreign exchange gains recorded on foreign currency denominated assets resulting from the depreciation of the Zambian kwacha, which fell from an average of ZMW13, 9 for one US dollar as of September 30, 2019 to ZMW17.2 for one US dollar as of June 30, 2020; increase in the Group’s profit share in associated companies, which rose from ZMW 154.8 million in September 2019 to ZMW 354.7 million in June 2020. This is mainly due to the increased profitability of certain companies invested in the mining sector, such as Maamba Collieries Limited and Kansanshi Mining Plc, ”ZCCM-IH said in the results released on Monday.
Currency gains also boosted the group’s total asset portfolio, which rose significantly to over K20.2 billion, from £ 14.5 billion last September.
“The group’s total assets increased by 40% to reach ZMW 20,262 million in June 2020, compared to ZMW 519 million in September 2019. This is mainly due to the increase in the value of investments in associates due to the ‘improved performance of Kansanshi Mining Plc, Maamba Collieries Limited and foreign exchange gains from translating investments denominated into US dollars, ”he said.
And ZCCM-IH said copper prices are expected to rise steadily due to the solid recovery in Chinese demand for copper.
Red metal prices peaked at around US $ 6,837 per metric tonne in the third quarter of this year, but fell to around US $ 6,409 per tonne in the last quarter.
“Copper prices are expected to rise steadily in response to a strong recovery in demand from China, the largest consumer of copper. In addition, low copper stocks in foreign exchange warehouses, disrupted ore reserves in the main producing region of South America due to the COVID-19 pandemic and the strengthening of the US dollar are contributing to the bullish outlook for the country. copper, ”ZCCM-IH said.
Source: ABC Bourse