eBusiness Weekly
Enacy Mapakame
Sugar processor, Starafricacorporation Limited, says the group will maintain a tight seal on its purse as part of cost containment measures at a time costs have been skyrocketing due to inflationary pressures as well as global economic challenges.
Businesses across sectors have been adversely impacted by rising costs coupled with supply chain disruptions caused by the conflict in Ukraine, which had a knock on effect on operations.
This is in addition to the Covid 19 induced challenges, which also disrupted business operations.
The environment is expected to remain challenging with businesses coming up with various strategies to offset the effects of the challenges.
“The Company will continue to tighten its cost-mitigation measures in an effort to improve the operating profitability of both the refinery and the sugar specialties unit,” said Star Africa chairman Dr Rungano Mbire in an update for the half year to September 30, 2022.
“Zimbabwe’s operating environment is expected to remain challenging, largely as a result of the prevailing imported inflationary pressures.
“The global economic outlook continues to be weighed down, with high interest rate hikes by most central banks and the negative spill-over effects from the Russia-Ukraine conflict. New waves of the Covid-19 pandemic continue to disrupt economic activity in some countries,” said Dr Mbire.
During the half year to September 30, 2022, revenue jumped 40 percent to $20,90 billion from $14, billion on the back of strong demand across group’s product range.
But operating profit went down 4 percent to $1,35 billion compared to $1,4 billion recorded during the same period last year.
The decline was a direct result of increases in raw sugar prices and operating costs in real terms.
Increasing global inflationary pressures have resulted in a spike in the costs of imported chemicals, packaging and refinery spares.
The period under review remained challenging for the business despite efforts made to tame them.
“The half year period under review was characterised by rising inflationary pressures and exchange rate volatility, combined with heightened economic uncertainty emanating from the Russia-Ukraine conflict.
“This continued to undermine economic recovery from the challenges associated with the Covid-19 pandemic in the prior year comparative period,” said Dr Mbire.
The group is however upbeat of increased foreign currency inflows into the economy, which will also benefit the business. This will be fostered by policy interventions by Government.
Dr Mbire said: “The company applauds Government’s efforts to foster structural economic transformation, as enshrined in the recent 2023 National Budget. These efforts are expected to improve the inflow of foreign currency into the economy. The Company looks forward to
“Government reinstating duty on imported sugar, a development which will impact positively on the local sugar industry.”
