Sugar manufacturer, Starafricacorporation Limited (SL) posted a 10,5% decline in refined sugar tonnes produced for its Goldstar Sugars Harare (GSSH) business to 32 047 tonnes for the half year ended September 30, 2019 due to power cuts.
BY MISHMA CHAKANYUKA
The decrease in manufactured sugar was from a comparative period figure of 35 791 tonnes.
SL was established in 1935 principally as a sugar refinery, with its Goldstar Sugar brand being its main source of revenue, but has since grown to become a diversified conglomerate listed on the Zimbabwe Stock Exchange.
“The unit (GSSH) continues to anchor the group in terms of both turnover and profitability in dollar terms. It produced 32 047 tonnes of refined sugar compared to 35 791 tonnes produced in prior half year,” SL’s group chairman, Joseph Mutizwa said in a statement accompanying the company’s financial results for the half year ended September 30, 2019.
“The slowdown was due to the acute power shortages experienced in July and August 2019 which resulted in the factory shutting down for five weeks.”
Mutizwa added that the power situation improved after the establishment of a ring-fenced power supply arrangement which came with a steep tariff review.
Zimbabwe has been facing crippling power outages lasting up to 18 hours daily. These power cuts have severely affected business operations in the industry and mines, hence leading to a decline in production.
In October, the Zimbabwe Electricity Supply Authority hiked tariffs by 320% to 162,16 cents per kilowatt hour (kWh) in a bid to improve the country’s power supply by charging cost-effective prices.
Apart from GSSH, SL operates Country Choice Foods (CCF), Tongaat Hulett Botswana that it has shares in and its Silver Star Properties business.
The CCF segment recorded earnings before interest, tax, depreciation and amortization (EBITDA) of $5 million against $400 000 realised in the same period last year.
The sector’s production was 9% higher than last year buoyed by the change in product mix where core products with better margins comprised most of the total sales volume for the period.
Tongaat Hulett Botswana achieved a converted profit after tax of $11,2 million while the group’s share was $3,7 million against $1,8 million and a share of $600 000 recorded in 2018.
“The growth comprised the unit’s actual performance in Pula terms as well as the effect of converting the Pula denominated performance into ZWL at exchange rates which have greatly depreciated since the start of the financial year,” Mutizwa added.
The Property business recorded a subdued increase in EBITDA from $200 000 to $300 000 owing to a decline in rental yields. The unit experienced a limited demand for space and constraints to what existing and prospective tenants could offer.
Starafrica recorded a rise in profit after tax to $20,3 million from a comparative of $12,4 million in the period under review.
Turnover for the period was $132,1 million, an increase from $28 million due to changes in product mix and inflation-related price adjustments aimed at preserving the company’s ability to service the market.
Mutizwa said the group expected strategies and eventual cessation of current austerity measures being pursued to keep the company on a sound financial footing.