eBusiness Weekly
Business Writer
Starafrica corporation, Zimbabwe’s leading sugar producer, paints a bittersweet picture in its latest financials for the interim period to September 30, 2023.
While revenue soared 35 percent, a flood of cheap imports and higher costs of doing business slashed profits by a staggering 723 percent.
According to a statement released by the company, turnover increased 35 percent to $99,41 billion from $73,52 billion in the prior-year comparative period.
However, the group’s operating profit receded by 723 percent, from $4,73 billion in the prior-year comparative period to negative $29,45 billion for the period under review.
As chairman Rungamo Mbire aptly puts it, “The industry has sufficient production capacity . . . but cheaper imported brands of sugar have penetrated the local market, resulting in reduced demand for locally produced sugar.”
This “bitter pill” swallowed by starafrica is a direct consequence of the 2023 National Budget, which removed sugar from the duty-free list.
Mbire, quoting SI 80 of 2023, laments the influx of cheaper imports that “negatively affected the industry’s ability to meet its working capital requirements.”
Despite the financial woes, starafrica remains cautiously optimistic.
Mbire highlights strategic measures aimed at “ensuring a return to profitability and positive cash flow generation.”
He emphasises the industry’s capacity to meet national demand.
“ The industry has sufficient production capacity and capability to supply good-quality sugar in sufficient quantities to meet the country’s requirements,” said Mbire.
However, the road to recovery is paved with challenges. Goldstar Sugars, starafrica’s sugar production arm, grappled with a three-month closure due to pricing disputes with its sole raw sugar supplier Tongaat.
This, coupled with the drop in demand, resulted in a 41 percent decline in granulated sugar sales.
Meanwhile, Country Choice Foods, the company’s specialty arm, also felt the pinch, experiencing a 46 percent plunge in sales volumes due to erratic raw material supply from Goldstar Sugars.
However, a glimmer of hope shines from the company’s properties business, which saw a significant revenue increase thanks to higher rental income.
The Property’s business revenue performance improved significantly, with $650,49 million of rental income recorded, compared with $352,42 million in the prior comparative period. Additionally, their associate company, Tongaat Hulett Botswana, turned a profit, contributing a positive note to the overall financial picture.
The Botswana unit recorded a profit for the period under review of $2,65 billion, of which the company’s share was $882,52 million after converting the earnings into Zimbabwe Dollars at the Reserve Bank of Zimbabwe Auction exchange rate as of September 30, 2023.
