PCL expects kwacha drop
Malawi’s largest private sector conglomerate, Press Corporation Limited (PCL), expects the Malawi kwacha to get back on its depreciation trend once the tobacco selling season comes to an end.
In an extract of its audited financial statement for the year ended December 31, 2015 signed by Chairman Simon Itaye and directors Damien Kafoteka, Matthews Chikaonda and Elizabeth Mafeni and released this week, PCL says its business prospects for 2016 still point to a continued subdued operating environment due to a negative economic environment in the country.
It says although the currency is appreciating and is expected to stabilise in the short term as the tobacco season starts, existing significant deficit on the current account, weak inflows from foreign direct investment and continued suspension of budgetary support will bring back pressure on the currency once tobacco sales close.
This, says PCL, will continue putting pressure on inflation.
“Likewise, interest rates are expected to remain high due to anticipated continued borrowing by the government in the absence of foreign budgetary support,” reads the statement, in part.
PCL also says food prices are expected to remain high in Malawi due to the anticipated drop in agricultural production as a result of late rains for the 2016/2017 growing season coupled with El nino weather that affected most parts of the country.
This, says PCL, will further worsen the already high inflation and reduce consumer demand.
The Malawi Stock Exchange-listed company has since registered a drop in pretax profit for the year 2016 of 25 percent, from K34.190 billion in 2014 to K25.589 billion in 2015 as the tough operating environment took its toll on the company.
The group reports that it experienced a net exchange loss of K8.032 billion, which included a K2.348 billion net exchange loss from equity accounted investments.
PCL directors have since recommended a final dividend of K1.02 billion, representing K8.50 per share to be approved at the company’s annual general meeting. If approved, it will bring the total dividend the company gave in 2015 to K1.502.5 billion or K12.50 per share.
