PCL profit down 43%, blames tough economic environment

Dual-listed conglomerate Press Corporation Limited (PCL) has reported a 43 percent drop in profit to K12.2 billion in the year ended December 31 2015 from 21.6 percent the prior period.

In a statement published yesterday accompanying audited financial results, PCL has blamed the operating environment for 2015, which was characterised by devaluation of the kwacha, high inflation and interest rates, tight liquidity and reduced consumer spending.

The results for PCL, one of the country’s largest conglomerates with interests in banking, telecommunications, energy and consumer goods segment, among others, reflects the country’s economic performance in 2015.

Most of the listed and non-listed companies have also posted reduced year end profits if not losses.

“The Malawi kwacha depreciated by 43 percent due to continued appetite for imports with weak inflows from exports and direct foreign investments. This was compounded by the low discretional spending and the increase in food prices due to reduction in maize production during the 2014/15 growing season.

“The operating environment was further dampened by the liquidity squeeze resulting from the contractionary monetary policy adopted by government to reduce pressure on inflation and stabilise exchange rates,” reads the statement signed by PLC chairperson Simon Itaye, group chief executive officer Mathews Chikaonda, group financial controller Elizabeth Mafeni and director Damlen Kafoteka.

PCL suffered net exchange losses of K8 billion from the prior year’s K1.7 billion, including net exchange losses from equity accounted investment totalling K2.3 billion, according to the statement.

The statement said financial segment anchored by National Bank of Malawi, energy (Puma Energy) and the real estate sectors registered growth in the year under review.

However, poor performance was registered in  fishing at Malawi Foods Limited, telecommunication (Malawi Telecommunications Limited and TNM plc) and consumer goods segment.

“The fishing farming business is still struggling with fish growth and high mortality on the aquaculture business and the trawl fishing is on the decline due to depletion of fish in the lake [Malawi]”.

The telecoms segment was hit the depreciation of the currency, suffering an exchange loss of K5.6 billion on its foreign exposure, and as a result, registered a 130 percent decline in its earnings, forcing both companies to borrow heavily in foreign currencies to fund their projects. n