The group, demerged from the late Tiny Rowland's mining empire in May, said it had been hit by a mix of tough market conditions, devaluations of African currencies and political trouble on the continent.
These plunged the company into a pounds 5.7m pre-tax loss for 1998 compared with a pounds 22.6m profit in 1997. However the shares, which have fallen from their 95p float price, shrugged off the figures and rose 3.25p to 50p.
Bernard Asher, Lonrho Africa's outspoken chairman, said the company's plight had been compounded by a revolt by a group of shareholders backed by financier George Soros. Blakeney Management and African Lakes, two emerging market funds with a 10.1 stake in the group, sought to replace half the board in a bid to break up the company. They were defeated by a narrow margin at a shareholder meeting last month.
Mr Asher said the costs of the rebellion "had been incredibly high. This company was completely disrupted for months and on top of this we have the monetary costs to advisers," to be revealed in this year's accounts.
On financial performance, chief executive Mark Newman said all Lonrho Africa's businesses, ranging from Toyota dealers in Uganda to pig breeding in Kenya, had been savaged by the plunge in the continent's currencies. Some currencies, such as Zimbabwe's, had fallen by over 60 per cent against the pound, wiping some pounds 36m from Lonrho's pounds 425m turnover.
A collapse in cotton prices depressed the company's core agriculture operations, while the bombing of the US embassy in Nairobi destroyed tourism, Mr Newman said.
The chief executive said the company would try to improve performance by selling non-core and poorly-performing businesses. In the long term the company would focus on just two divisions - agribusiness, which includes cotton, timber and food procession, and distribution, including car dealerships and wholesale food.
Mr Asher said business conditions were no better so far this year, although it was unlikely 1999 would see a repeat of "cataclysmic events" such as the Nairobi bomb.
Analysts cautioned that Lonrho's core markets would remain tough for most of 1999. "We are likely to see a poor set of figures in the first half of 1999 followed perhaps by a bit of a pick-up in motors in the second half," said John Meyer at SG Securities.
Commentators noted that Lonrho Africa's shares are trading at a huge discount to its net assets of 106p, making the company a takeover target. "There are a lot of emerging markets funds which would be interested," one said.
Jenni Chamberlain, African equity analyst at HSBC, said the shares should be bought "because of the chance of somebody taking them over, but also because of the break-up value". She said Mr Newman's disposal strategy would improve the company's performance.