eBusiness Weekly
Business Writer
Power outages experienced during the month of July and August saw one of the country’s sugar producers, starafrica corporation records lower sales, reversing good volumes recorded for the three months to June 2019.
Chief executive officer Regis Mutyiri told the AGM earlier this week that while volumes sold to June 2019 were ahead of the comparative prior year, the loss of sales experienced in July and part of August 2019 had reversed headway made in the first three months of the financial year.
Mutyiri said the group had suffered from product shortages following prolonged power outages in July during which production was severely curtailed.
“Volumes were ahead of last year up to June 2019. However, the loss of sales experienced in July and part of August 2019 were due to power outages thereby reversing the headway made”, he said.
He, however, noted that there has been an improvement in recent past.
The power supply to the sugar plant has improved significantly as a result of the conclusion of an agreement with ZETDC in August 2019, he said, adding that closing the power supply gap will help the company meet its budgets.
Power challenges were, however, not the only challenge faced by the company as shrinking disposable incomes and a shift to basic consumer products affected uptake of its food products produced under the Country Choice Foods banner.
Mutyiri said the uptake from Bakers and Confectioners slowed down as these customers were suffering from insufficient raw materials like flour and reduced production levels due to power outages.
He said while the pursuit of new products will continue, focus at the moment will be directed on exports and management is very upbeat on the export prospects.
Already, exports of granulated sugar and Country Choice Foods products to regional markets have commenced and the group anticipate acceleration of volumes in that market segment. Target markets include traditional ones Botswana and South Africa and new ones in territories like the Democratic Republic of Congo.
Like many other companies, starafrica has had to deal with escalating costs, input costs included. Input costs have continued to increase against limited latitude to fully recover through price adjustments thereby putting pressure on margins, said Mutyiri.
As a measure to mitigate costs like cost of raw materials, manpower cost and other inputs, management employed measures which include termination of contracts for some roles deemed redundant.
Positive outcomes from cost containment measures that have been implemented are thus expected to keep the company profitable going forward.
