adminThe conglomerate clearly believes in the potential of local operations to leverage its US$462 million revenue target in the 15 months to December next year.
Arguably, Zimbabwe will be an important part of the company’s assets, which it calls “the world’s last frontier” with huge potential for low cost but high returns.
Effectively, Lonrho controls 46 percent of Zimbabwe focussed LonZim through its 23,7 direct shareholding and a 22,93 percent stake through an associate.
The company, which returned to the London Stock Exchange from the junior AIM has already established integrated transportation between Harare and London.
Boasting that Lonrho can get fruit from a Zimbabwean farm to central London in three days, chief executive Geoffrey White said the company had integrated every step of the process from cold storage to delivery.
Produce accounts for half of the company’s agri-business, which is 60 percent of overall revenues. The other half comes from the fish company’s (Lonrho) exports to big supermarkets chains in the UK, the US as well as South Africa.
“We do not think there is risk in non-cereal farming. If there is a famine, (in Africa) people won’t come after our green peppers,” said Mr White.
LonZim owns 61 percent of ZSE-listed Celsys, which specialises in security printing, information technology and telecommunications. It also owns 100 percent stake in Millpal, 51 percent in pharmaceutical distributor Panafmed and 51 percent in mobile software producer ForgetMeNot.
It has sold its 79 percent in beachfront located Adeamento Turistico de Macuti Hotel in Mozambique and is planning more investments in Zimbabwe.
In addition, the company owns 100 percent of electronic transfer solutions Paynet and 100 percent of the exquisite Leopard Rock Hotel in the Eastern Highlands.
In October, LonZim announced plans to reinvest into its Zimbabwean operations the US$5,1 million proceeds from the disposal of its entire shareholding in the Mozambique subsidiary, Aldeamento Turistico de
Macuti.
Lonrho remains positive on Africa after a US$9,3 million turnover in the year ended August 2011 up from the US$8 million recorded in the prior year. Gross profit for the full year went up by 55 percent to US$2 million.
The group’s loss before tax increased to US$10 million up from previous year’s loss before tax of US$9 million, but expects better results in 2012.
LonZim’s performance improved in the half year to February this year.
Operating losses fell to US$4 million, down from US$5 million. Gross profits rose to US$2,8 million from US$1,7 million in same period last year.
Pre-tax losses rose US$5 million from US$4 million and the loss attributable to shareholders rose to US$5,2 million from US$4 million last year.
But the seemingly ominous negative figures have not rattled the confidence of directors when they compare Africa to Asia three decades back.
Lonrho chairman David Lenigas said “Africa is where Asia was 30 years ago and, in reality, 10 to 15 years in front of people expectations”.
The 102-year-old conglomerate came apart in 1990s brought down by a crash in metal prices. But Lenigas and White have brought a new lease of life.
Lenigas convinced the board to once again bet on Africa. Along with Mr White, who joined two years after him, they have revived Lonrho, which they say still has “the strength of a Coca-Cola brand name” in Africa.
Six years on, their gamble is starting to pay off. They have invested in agri-business, infrastructure, transportation, hotels and support services in 17 African countries.
But analyst Damian McNeela at Panmure Gordon believes that would depend on what the company does with its loss-making airline, Fly540 Africa.
“There’s screaming demand for north-south and east-west travel in Africa,” said Lenigas defending the decision to cling to the airline business.
Online Reporter